Jeremy Lefroy (Stafford) (Con)
1. What assessment he has made of the effect of freezing fuel duty on the price of petrol.
The Chancellor of the Exchequer (Mr George Osborne)
This Government will freeze fuel duty for the rest of this Parliament. As a result, petrol will cost a full 20p per litre less than if we had stuck with the previous Government’s hated fuel duty escalator. We can afford to do this because we have got a grip on the public finances.
The House will also want to know that today we learned that GDP grew by 0.8% in the first quarter of this year. That is 3.1% over the year and today’s figures show that Britain is coming back. We cannot take that for granted. We have to go on working through our long-term economic plan, but for the first time in a decade all three main sectors of the economy—manufacturing, services and construction—have grown by at least 3% in the past year.
The impact of the great recession is still being felt, but the foundations—
Mr Speaker
Order. The Chancellor will resume his seat. The answer was not just too long—it was far too long.
Mr Osborne
Absolutely, Mr Speaker: having heard all the bad economic news in the previous Parliament, I thought Parliament would want to hear some good economic news. The reduction in fuel duty is one of the number of steps we have taken to support the British economy and families. As my hon. Friend says, we have just published a study that shows that the reduction and freeze in fuel duty has the potential to increase GDP by 0.5%. As Conservatives, we understand that lower taxes mean higher economic growth.
Mr Andrew Tyrie (Chichester) (Con)
The whole House will welcome the fact that we now have a policy to drive down costs on hard-pressed motorists, who have found it very tough in recent years. Can we take it from the Government that that reflects a wider shift in policy and that they are seeking to bear down on other energy input costs, including those of fossil fuels, in order to help hard-pressed consumers and encourage British competitiveness?
Mr Osborne
We need to have competitive energy prices while at the same time building a sustainable energy mix. The major £7 billion package in the Budget to help with the cost of energy for manufacturers has been welcomed not just by the big energy-intensive industries, but by many small business and, of course, families.
Angela Smith (Penistone and Stocksbridge) (Lab)
2. What recent representations he has made to the European Union on the proposed cap on bank bonuses.
The Economic Secretary to the Treasury (Andrea Leadsom)
In September, the Government launched a legal challenge to the bonus cap provisions agreed under EU capital requirements directive 4. We feel that those rules were rushed through without any assessment of their impact and that they will undermine the progress we have made to try to align remuneration with risk by pushing bankers’ fixed pay up rather than down.
Angela Smith
The Chancellor has chosen to prevent the Royal Bank of Scotland from paying bonuses to employees that are worth more than double their salary, but he has not done the same with Lloyds. Will the Minister explain why what is good enough for RBS is not good enough for Lloyds?
Andrea Leadsom
RBS has made a good start on its return to growth under Ross McEwan. It now has a good strategy to be the best small and medium-sized enterprise bank in Britain, but it still has a very long way to go. Therefore, we felt, and United Kingdom Financial Investments Ltd agreed, that the right thing to do was to not allow RBS to do what other private sector banks have done, which is to go for the maximum of 2:1 in terms of bonus to salary. Lloyds, on the other hand, is much further along the road to recover, so it was fine to allow it, in line with other private banks, to go ahead with that 2:1 plan.
Mr Julian Brazier (Canterbury) (Con)
May I say how good it is to see my hon. Friend in her new position? I welcome her answer. Does she agree that the best way to tackle widespread concern about excessive bonuses is through opening the banks up to proper shareholder inspection and answerability, as we are gradually doing?
Andrea Leadsom
Yes, my hon. Friend is absolutely right. One of the priorities of this Government has been to ensure proper scrutiny of directors’ pay and remuneration, so the changes in the Prudential Regulation Authority guidelines introduced last year, strengthening improvements made by the Labour Government, are designed to do just that—to put us at the forefront of scrutiny and transparency in pay for banking.
Mr George Mudie (Leeds East) (Lab)
May I offer my congratulations to the hon. Lady on her much-deserved promotion? The whole House welcomed the Chancellor’s intervention to stop loss-making RBS paying these bonuses to its investment bankers. However, it has now emerged that RBS intends to pay that money as allowances. What is the Government’s intention on this matter?
Andrea Leadsom
May I first thank the hon. Gentleman for his congratulations and say how very much I enjoyed working with him for several years on the Treasury Committee? As with many Opposition Members, there has been a lot of agreement between us on issues of competition and minimising pay. With regard to allowances, the key point to remember is that bonuses at RBS are down 68% overall since 2009. The figure we want to focus on is the restriction in pay and bonuses across that bank.
Chris Leslie (Nottingham East) (Lab/Co-op)
I, too, genuinely welcome the hon. Lady to her post and the Prime Minister’s decision to appoint her to the Chancellor’s Department. May I ask her to be very clear on this particular point? The Chancellor of the Exchequer is using the EU bank bonus cap legislation in respect of RBS, but at the same time the Government are mounting a legal challenge against that legislation. Will she clear up some of the confusion? She alluded to whether it was a UKFI decision, and it was reported that the Deputy Prime Minister apparently waded in to override the Chancellor. Was the Deputy Prime Minister at odds with the Chancellor, or was the Chancellor just at odds with himself?
Andrea Leadsom
I am grateful to the hon. Gentleman. The key point to remember is that we are challenging the proposal at the European Court of Justice because we believe that it will not suppress remuneration and create proper equivalence between risk and remuneration in the banking sector. We in this country are at the forefront of trying to ensure that risk and reward are properly aligned. We do not think that the bonus cap will do that, so it is perfectly consistent to implement the cap—since it is the law—but to challenge it in the European Court of Justice.
Chris Leslie
I very much hear what the hon. Lady says, but I am asking a question about how the decision was made. Who was involved: was it UKFI; was it the Chancellor; or was it the Deputy Prime Minister who did it? I might not get a clear answer, so maybe I can move on to the next question: how much has this cost so far? It is a legal challenge to the change that she is herself using. How much has it cost so far, and is it a good use of taxpayers’ money?
Andrea Leadsom
The legal challenge is in line with all legal challenges of this sort. To protect the British financial services sector, it is very important to try to challenge the proposal. There has been a House of Commons European Scrutiny Committee report on the cost of similar legal challenges. It is not excessive—it is £25,000 to £35,000, or of that order—but the point is that we in this Government are trying to align risk and reward, which is absolutely crucial for the success of the financial services sector.
Graham Evans (Weaver Vale) (Con)
3. What recent steps he has taken to make saving more flexible.
The Chancellor of the Exchequer (Mr George Osborne)
This Government believe that people who have worked hard and saved hard through their lives should be trusted with their own pension savings in retirement. That is why, following the Budget, we have already given people much greater access to their pension savings and why, from next April, they will have complete freedom of access to their defined contribution scheme.
Graham Evans
This year’s Budget exposed some people’s innate belief that those who have worked hard and saved all their lives could not be trusted with their own money. Will my right hon. Friend the Chancellor reassure savers in Weaver Vale that he rejects such patronising views, and will he update the House on his plans to let people choose how to spend their own money and to make savings far more flexible?
Mr Osborne
I absolutely agree with my hon. Friend. The fact that the Labour party had nothing to say in response reflects the muddled approach: it did not support the measure, but it did not know what to do with a popular Budget proposal. We are absolutely clear that we reject the patronising view, pursued by the previous Government, that the state knows better than individuals how to spend their money. Trusting people, reducing taxes, supporting savers—that is this Government’s approach.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Chancellor agree that the traditional financial services sector has let down savers and borrowers? Is it not time that he gave more encouragement to the crowdfunding sector, which is flexible and gives a much better deal?
Mr Osborne
The hon. Gentleman has asked me about that matter at previous Treasury questions and I know that he takes a keen interest in it. He wrote to thank me for the measure in the Budget to include crowdfunding vehicles in individual savings accounts. That is an important step to support this new sector.
Mr James Clappison (Hertsmere) (Con)
As the Government’s long-term economic plan unfolds successfully, will my right hon. Friend consider giving further encouragement to savers through ISAs? Savers have warmly welcomed the greater flexibility that he has introduced with the new ISA regime.
Mr Osborne
Alongside the flexibility in and access to pension pots, we have increased the limit for both ISAs to £15,000. The new ISA will come in at the beginning of July and there will be complete flexibility in transferring funds from equity ISAs to cash ISAs. Of course, we have also abolished the 10p savings rate. Unlike the shadow Chancellor, when we abolish a 10p rate we get rid of it altogether, rather than doubling it.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
The Chancellor said that last month’s Budget was a Budget for savers, so will he tell us why page 106 of the Red Book shows that the saving ratio is falling and that it has been revised down this year, next year, the year after and in every year up to 2018?
Mr Osborne
What the hon. Lady did not say is that by 2018 the saving ratio will still be double what it was under the Labour Government. That is a rather important piece of information that she failed to tell the House. We are 15 minutes into Treasury questions. When will a Labour MP welcome the GDP numbers?
Robert Flello (Stoke-on-Trent South) (Lab)
4. What recent assessment he has made of the level of bank lending to businesses since May 2010.
The Economic Secretary to the Treasury (Andrea Leadsom)
In May 2010, business lending was contracting sharply in the aftermath of the financial crisis. The Government have introduced various measures aimed at improving bank and non-bank lending to businesses, in particular the business bank and the funding for lending scheme. Since 2010, survey evidence has suggested that the credit conditions for businesses have improved significantly and gross lending flows have increased.
Robert Flello
The latest funding for lending figures show that, shockingly, net lending to small businesses is down by £2 billion at RBS. Should not a bank that still has huge support from the taxpayer be serving Britain’s small businesses better?
Andrea Leadsom
The hon. Gentleman is right to point out that there has been an enormous challenge since the financial crisis. Banks still have a long way to go to work out their balance sheets and to ensure that they are again lending to small businesses. RBS announced recently that it has the single goal of becoming the No. 1 SME bank in the UK. Banks are focused on that issue and it is vital that they are.
Charlie Elphicke (Dover) (Con)
Does the Minister agree that Labour’s crash caused a massive problem in our banking system, which hurt the ability of banks to finance businesses, and that with the long-term economic plan it will become easier for banks to find the reserves that they need to get more money to business and to help grow the economy further?
Andrea Leadsom
My hon. Friend is absolutely right. The financial crisis caused a massive problem in our banking sector. The measures that have been brought in by this Government, such as the funding for lending scheme and the improved impetus towards bank competition, are helping to improve the situation for small businesses—the lifeblood of our economy.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Since funding for lending was introduced, funding for small businesses has actually gone down. Businesses in my constituency tell me that one of the biggest problems is the withdrawal of overdraft facilities by many banks. What is the Minister doing to ensure that such short-term cover is available.
Andrea Leadsom
Only recently, the national policy chairman of the Federation of Small Businesses said that funding for lending is helping to bring down the cost of credit for small businesses. It is vital that banks focus on rebuilding business lending, and many of them are doing so. As the economy recovers, we expect that to pick up. Indeed, gross lending is 12% higher than in 2012-13.
Mark Pawsey (Rugby) (Con)
Companies in my constituency tell me that confidence is at a new high. In many instances, they are able to fund investment through their own resources. Despite that, gross lending is up over the past 12 months. Does my hon. Friend agree that the concerns that funding for lending would be used for residential property purchases were misplaced?
Andrea Leadsom
I agree with my hon. Friend. The Help to Buy scheme accounts for only 0.5% of total mortgage lending, and real house prices remain 15% below pre-crisis levels. There is no evidence to suggest that the funding for lending scheme has led to a property price bubble.
Mr Robin Walker (Worcester) (Con)
5. What recent assessment he has made of growth in the economy.
The Chancellor of the Exchequer (Mr George Osborne)
As you know, Mr Speaker, GDP grew by 0.8% in the last quarter and 3.1% over the year. Growth is broadly balanced, and those who predicted a year ago that our plan would choke off recovery got it spectacularly wrong.
Mr Walker
In March last year, with youth unemployment in Worcester at 645, the shadow Chancellor said that
“the economy will get worse”.
Youth unemployment in Worcester is down by a quarter since then and by 40% since it peaked under Labour. Will my right hon. Friend the Chancellor update the House on how the wider economy has performed during that time?
Mr Osborne
My hon. Friend is absolutely right. Since the shadow Chancellor made his prediction, the economy has grown by more than 3% and almost 1 million jobs have been created. In Worcester the claimant count is down by 20% in the past year, so we have more of these predictions from the shadow Chancellor and the economy just keeps growing.
Ian Austin (Dudley North) (Lab)
Does the Chancellor not understand that despite the belated but welcome growth in the economy, the only people who are not worse off than they were four years ago are the super-rich—people such as him and the other multi-millionaires sitting around the Cabinet table? His wilful refusal to accept what every ordinary family in the country know, from their daily experience just goes to show how out of touch he is.
Mr Osborne
Of course families are feeling the impact of the great recession over which the last Government presided, but the hon. Gentleman talks about who has felt the benefit of growth. What about the people in his constituency who have got a job, where unemployment has fallen by 17% and youth unemployment is down 18%? What about the 1.5 million people who have got jobs as a result of this Government working through their long-term economic plan?
Christopher Pincher (Tamworth) (Con)
20. I welcome today’s excellent news. With the deficit down, growth up and more people than ever in work, the Government’s long-term economic plan is clearly delivering for my constituents. However, there is always more to do, so will my right hon. Friend tell me what further steps he can take to encourage growth in workplace apprenticeships? In Tamworth, they have grown by more than a third.
Mr Osborne
We have provided more than 1 million apprenticeships, and in the most recent Budget we provided more support for apprentices by extending grants to small and medium-sized companies to help them take on apprentices. We also introduced and expanded degree-level and post-degree-level apprenticeships. Apprenticeship schemes are one of this Government’s great successes, and we are going to build on it.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the Chancellor accept that the growth he is talking about is fuelled by mortgages pushing up house prices and consumer debt? Lending from banks is now at the 2008 level for mortgages but down 30% to businesses, which is why productivity and real wages are down. When will he deliver sustainable growth rather than a bubble before an election?
Mr Osborne
The hon. Gentleman obviously has not looked at today’s GDP numbers, because they show that the sector that has grown most strongly is manufacturing.
Mr Osborne
The hon. Gentleman mentions services, but manufacturing has grown by 1.3% in the last quarter and services by 0.9%. Even a Labour MP can work out that 1.3 is higher than 0.9.
Andrew Percy (Brigg and Goole) (Con)
Long before the great recession, the region that it is my privilege to represent was getting poorer relative to the rest of the UK, with youth unemployment rising and private sector jobs shrinking. Now, however, things seem to be on the turn. May we have an assurance that, this time, the recovery will be for all, particularly for the north of England, and that we will finally start to bridge the gap that grew under the Labour party?
Mr Osborne
My hon. Friend is right that the gap between the north and south grew under the last Government, who put all their bets on the City of London, which went spectacularly wrong. In his part of the world, which he represents so ably, we are not only helping manufacturing by reducing energy costs, which is important for steelworks in his area and elsewhere, but helping with the tolls on the Humber bridge. We have also had the great news that Siemens will open its new wind turbine factory in the area. Those are all examples of how we will have a more balanced economy than the one that we inherited.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Back in 2010, the Chancellor promised to balance the books in 2015 and said that living standards would rise “steadily and sustainably”. Following today’s welcome news that the economy is finally growing again, will the Chancellor tell us whether he is now on track to keep either of those two promises?
Mr Osborne
I am delighted that the shadow Chancellor is still here. He is the man who, quite literally, crashed the car. On that occasion he fled the scene, but when it comes to crashing the British economy he cannot escape scrutiny of his record. Let me be clear: we said we would get the deficit down, and the deficit has come down; we said we would recover the economy, and recovery is taking place. He predicted that 1 million people would lose their jobs, but 1.5 million jobs have been created. He has apologised to the lady whose car he crashed into—why does he not apologise to the British people?
Ed Balls
If this Chancellor wants to have a discussion about whiplash we can do that any day of the week—Mr, Mrs or Mistress. However, let us not go back to biographies of the past; let us get back to the serious issue. The fact is that the Chancellor has failed to answer my question. For all his promises, he has broken them, even on the deficit, and living standards are not rising but falling year on year on year. People are £1,600 worse off under the Tories. If the Chancellor really thinks that his economic plan is working, let him answer this one simple question: at the next election, after five years of this Chancellor, will working people be better off than they were in 2010—yes or no?
Mr Osborne
Of course Britain will be better off because we will not have the mess of an economy on the brink of collapse, a banking system on its knees, and an 11% budget deficit. The only way to help people in this country is to grow the British economy. What the figures reveal today is that Britain is coming back, but we cannot take that for granted. People are still experiencing the impact of the shadow Chancellor’s economic policies, and the only thing he can say to us is “Why are you not clearing up our mess quickly enough?” That is literally what he is saying; it is absolutely pathetic. His car crash was caused by a seven-point turn that he was trying. Why does he not just get up, make a simple U-turn, admit that he got it wrong and that Britain is growing again?
Stella Creasy (Walthamstow) (Lab/Co-op)
6. What comparative assessment he has made of trends in the annual rates of inflation and growth in average earnings since May 2010.
The Chief Secretary to the Treasury (Danny Alexander)
The Institute for Fiscal Studies has said that there have been significant falls in real earnings as a direct but delayed result of the 2008 recession. The actions that the Government are taking are working, including taking 3.2 million people out of income tax by 2015-16, thanks to our policy of increasing the income tax personal allowance, and also because of the strong, sustained and welcome growth that we see in the figures today.
Stella Creasy
Of course, one of the other things that are growing in our economy is personal debt. We know that 40% of the public struggle to make it to payday, and for a third of those people it is repayments on the debts they built up under this Government that are the problem. What impact does the Minister think that that personal debt mountain will have on his long-term economic plan?
Danny Alexander
Household debt income ratios have fallen during this Parliament, as the hon. Lady will know, but—this is a good lesson for the Labour party—there is no shortcut for increasing people’s living standards, which is the answer to the question she poses, and no short cut to increased productivity in our economy. That means increasing growth in the economy and sticking to the coalition’s plan, which is being delivered by Liberal Democrats and Conservatives in this Government. That is the important thing to do for the next few years to ensure that we have a stronger and more sustainable economy in this country.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Has my right hon. Friend had a chance to consider what the impact would be on annual rates of inflation and growth of a potential 1% increase in national insurance contributions, and particularly the impact of that on the NHS budget?
Danny Alexander
It would have a significant impact on almost every working person in this country. The Government’s direction of travel, led by the Liberal Democrats, has been to reduce the burden of taxation on working people. Some 26 million working people have seen their income tax bill reduced this month by £700 a year, thanks to the decisions that this coalition Government have taken to increase the personal allowance to £10,000.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Perhaps the Chief Secretary can do better at answering this simple question. Next year, the Chancellor will have been in post for five years. Will the Chief Secretary confirm that figures from the Office for Budget Responsibility show that over that time real wages will have fallen by 5.6%, leaving working families worse off, not better off, after five years of the Chancellor’s stewardship of the economy?
Danny Alexander
The hon. Lady will know that the OBR forecasts earnings to grow more rapidly than inflation throughout the forecast period—that is the answer to the question. I have to say that the hon. Lady seems to have been listening to the shadow Chancellor rather too closely. I notice his recent quote:
“I had no awareness at all that there had been any damage”.
He was referring to his car rather than to the British economy, but it is about time that the Labour party apologised for the mess that it made of the latter.
Neil Carmichael (Stroud) (Con)
7. What fiscal steps he has taken to encourage manufacturing in the UK.
The Financial Secretary to the Treasury (Nicky Morgan)
The Government are committed to strong and sustainable economic growth that is balanced across the economy. The manufacturing sector, as my right hon. Friend the Chancellor has already said, is a vital part of it. In the recent Budget, the Government announced a package of measures to reduce energy bills for manufacturers and improve their competitiveness, for example, by capping the carbon price floor. Earlier this month, the Government announced a £100 million extension to the advanced manufacturing supply chain initiative.
Neil Carmichael
I echo the Chancellor’s welcome to the excellent GDP numbers. Despite the fact that the Labour party continues to wallow in its own failed predictions of doom, manufacturing has actually increased by 1.3%. That is very obvious in my constituency. With the long-term economic plan in mind, what more can we do to promote British manufacturing?
Nicky Morgan
I thank my hon. Friend for that question. I understand that he established in his constituency the annual festival of manufacturing and engineering, and that the next event will be held in November 2014. As he said, this morning’s GDP figures show the strongest annual performance for manufacturing for three years—up 3.4%. He asked what more the Government can do. In the Budget last month we announced plans to double UK Export Finance’s direct lending programme and further to increase our support for apprenticeships.
Mr Jim Cunningham (Coventry South) (Lab)
Has the Chancellor, in his long-term plans for the economy, looked at the impact of any increase in interest rates on businesses, and in particular on manufacturing?
Nicky Morgan
First, it is welcome to hear Opposition Members talking about this Government’s long-term economic plan. Long may they continue to do so, but I am not going to take lessons on manufacturing from them. Manufacturing halved as a share of the economy under the previous Labour Government. This Government are on the side of manufacturers and small businesses up and down the country.
Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD)
Today’s GDP figures are particularly welcome and the contribution by manufacturing is especially impressive. Many manufacturers are investing heavily in skills, but get frustrated that their skilled employees are poached by others who are not making that investment. What measures can the Minister suggest to help to share the burden of investment in skills?
Nicky Morgan
I thank the right hon. Gentleman for that question. He is absolutely right. Skills is an issue mentioned, I am sure, to all Members from all parts of the House every time they visit their local businesses. We have invested in apprenticeships, so we are growing a skilled work force. In 2012-13, the Government supported 66,000 apprenticeship starts in engineering and manufacturing technologies. He is right that we have to invest in skills all the way through the work force and all the way through their working life, but we are making a great start with apprenticeships.
Charlotte Leslie (Bristol North West) (Con)
8. What steps he is taking to secure funding for infrastructure projects.
The Chief Secretary to the Treasury (Danny Alexander)
Through difficult decisions on day-to-day spending, we have prioritised vital capital investment in infrastructure projects. Last year I set out a £100 billion pipeline of specific projects right the way through to the end of the next Parliament, including many projects in the south-west of England. For example, the hon. Lady and I were both present on Friday when we announced funding for Bristol’s successful bid to be the green capital of Europe.
Charlotte Leslie
I know this Government are committed to large infrastructure projects, but will the Chief Secretary recognise the value of more modest, branch-line rail infrastructure projects, such as the Henbury loop line in Bristol, which is vital to the community and to jobs? Will he look closely at providing the extra funding needed to reopen the line, not as a dead-end spur, but as a circle line around the city, which would unleash the economic dynamism of Bristol?
Danny Alexander
I am grateful to my hon. Friend for raising that point. It was raised with me in Bristol on Friday and I know she has raised it directly with the Chancellor of the Exchequer. It has also been put forward by the West of England local enterprise partnership in its strategic economic plan, which is being discussed as part of the growth deals process, so I urge her to encourage people locally to continue to advocate for the project as part of that process.
Bill Esterson (Sefton Central) (Lab)
9. What recent estimate he has made of how much the reduction in the additional rate of income tax to 45% will be worth each year for a person earning £1 million a year.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The cost of reducing the additional rate of income tax to 45% is estimated to be around £110 million a year, as set out in table 2.2 of Budget 2013. We have not broken down the impact by income ranges. That is because there is a significant behavioural response associated with the additional rate of income tax. The behavioural response is estimated in aggregate and reflected in the costing.
Bill Esterson
Ordinary people are £1,600 a year worse off under this Government. More than 15,000 working people in my constituency alone are paid less than the living wage. Is not the reality that a tax cut for millionaires is totally the wrong priority when so many ordinary people face a cost of living crisis?
Mr Gauke
It should be pointed out that unemployment in the hon. Gentleman’s constituency has fallen by nearly 30% in the last 12 months. The challenge with the 50p rate is that it is not very effective at reducing the deficit, but it is effective at driving jobs and growth out of the UK. Maybe that is why Labour supports it.
Jacob Rees-Mogg (North East Somerset) (Con)
Is not Her Majesty’s Government right to consider the overall effect on the economy when setting income tax rates and not to use them as a means of squeezing the rich out of Britain? Is it not also sensible to consider the extra revenue that comes from lower rates?
Ian Murray (Edinburgh South) (Lab)
Will the Minister tell the House and the country today that his Government rule out any more substantial tax cuts for the richest before the next general election?
Guy Opperman (Hexham) (Con)
Cutting taxes surely promotes growth and investment and produces the jobs that we see in the north-east, where manufacturing is up and fuel duty is frozen. More specifically, last week I went on to the banks of the Tyne and saw 1,000 people working on shipbuilding for the first time in a very long time.
Simon Wright (Norwich South) (LD)
10. What steps he has taken to reduce the cost of living for people on low incomes.
The Chief Secretary to the Treasury (Danny Alexander)
The coalition Government have taken decisive action to support families on low incomes. Increasing the personal allowance, for example, will take 3.2 million individuals out of income tax altogether by 2015-16. We have helped to freeze the council tax, frozen fuel duty and reduced energy bills, providing universal free school meals for infant schools and introducing tax-free child care support of up to £2,000, all on top of the most important thing, which is an economic plan that is delivering strong and sustained growth for this country.
Simon Wright
This month more than 3 million low-paid people have been taken out of paying income tax altogether since 2010, as a result of delivering the Liberal Democrat manifesto commitment of a £10,000 tax threshold. Can my right hon. Friend say how the impact of this policy on low-income workers compares with the previous Government’s policy of abolishing the 10p tax rate?
Danny Alexander
That is a very good question. My hon. Friend and I are both very proud of reaching the £10,000 tax-free allowance goal that the Liberal Democrats set in our election manifesto. Our increases in the tax-free allowance total more than £3,000, which is considerably more than the width of the former 10p starting rate band and is, of course, a 0% band. In that sense, it is literally twice as good as the previous policy.
Sheila Gilmore (Edinburgh East) (Lab)
For the 17% of wage earners who are already below the income tax threshold, much of what has been said is not of much help. Will the Chief Secretary directly commit to helping low-paid families with child care costs by reinstating the 80% level rather than the 70% level, which he introduced, so that people in that category can begin to gain rather than simply stand still or become worse off?
Danny Alexander
I am sure that if the hon. Lady had had longer, she would have welcomed today’s growth figures and the jobs and employment opportunities that that has created for people right across the United Kingdom, particularly in Scotland. The 3.2 million people that the hon. Lady mentions have already been taken out of tax by the actions of this coalition Government—something that she did not welcome. Of course, the extra opportunities to increase their time in work also helps those individuals. We are increasing our support for child care, with the Government providing free hours, extending support under universal credit and introducing tax-free child care, too. This Government have done far more than any previous Government to help working people with children get back into work.
Kate Green (Stretford and Urmston) (Lab)
11. What recent assessment he has made of the effect of his fiscal policies on the level of child poverty.
Chris Ruane (Vale of Clwyd) (Lab)
14. What recent assessment he has made of the effect of his fiscal policies on the level of child poverty.
The Financial Secretary to the Treasury (Nicky Morgan)
This Government are protecting vulnerable groups while taking action to tackle the record deficit we inherited. Work remains the best way out of poverty and last month’s Budget took action to support families by making the tax and welfare system fairer and by further increasing the income tax personal allowance to £10,500 next year, which will take 3.2 million people on low incomes out of tax altogether.
Kate Green
I must take issue with the Minister. Most children in poverty are in working families, so work is not a secure route out of poverty. Why are the Government’s policies on the proceeds of growth not reaching those children?
Nicky Morgan
I have already said in answer to the question that work remains the best way out of poverty, and I set out the raising of the personal allowance. There is no doubt that children who grow up in workless households are three times more likely to be in poverty. This Government remain committed to eradicating child poverty, but are taking action to tackle the root causes rather than allowing people to continue in welfare dependency.
Chris Ruane
Is the Minister concerned that the Institute for Fiscal Studies predicts that an additional 400,000 children will be living in poverty by the end of this Parliament? Workers may have jobs, but their children are not benefiting from them. That is the issue that the hon. Lady and her Government fail to realise.
Nicky Morgan
As I have already said, this Government remain absolutely committed to eradicating child poverty. We have set out our child poverty strategy, which sets out our aims. In October 2011 the IFS predicted a fall of 100,000 in the number of children in relative poverty, but the actual fall was 300,000. Rather than looking at predictions, let us look at what we actually achieve in government.
Mary Macleod (Brentford and Isleworth) (Con)
The Minister is absolutely right that the way out of child poverty is to reduce unemployment, which has gone down 20% in my constituency, and to take the poorest paid out of tax altogether. Will my hon. Friend confirm that this Government’s tax-free child care policies are also important, as they help 2 million families with their child care, which will make a real difference to them—four times better than the previous Government did with their voucher scheme?
Nicky Morgan
I thank my hon. Friend very much for her question. She is absolutely right that child care is one of the biggest barriers to enabling people, particularly women, to work. The Government’s tax-free child care policies as well as the moves under universal credit to help those on low incomes will be instrumental in helping more and more people. We have already seen the recently published employment figures showing that more women are in work than ever before.
Mark Menzies (Fylde) (Con)
12. What fiscal steps he is taking to help businesses to invest and export.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are actively supporting the export investment aspirations of British businesses to ensure that companies have access to world-leading export finance. Budget 2014 announced that UK export finance’s direct lending facility will be doubled to £3 billion and the rate of interest cut by a third to the lowest level allowed by international agreements. UK Trade & Investment’s programme budget has been doubled during this Parliament and the organisation is on track to help 50,000 companies export by 2015—double the number supported in 2010. In addition, our corporation tax reforms are helping investment.
Mark Menzies
I recently hosted a UKTI exporting event at BAE Systems in Warton in my constituency and I was asked about what funding streams could be available for businesses wishing to access foreign export markets. What is the Minister doing to ensure that the funding is available for Fylde small and small and medium-sized enterprises to expand their businesses into export markets?
Mr Gauke
My hon. Friend has asked a very good question. As I have said, the Budget doubled UK Export Finance’s direct lending programme. Moreover, earlier this month we announced a £100 million extension of the advanced manufacturing supply chain initiative, and a £1 billion package to support the Aerospace Technology Institute was announced in the 2013 Budget. The Government are working hard to ensure that we secure the growth that is required by small and medium-sized enterprises in my hon. Friend’s constituency.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The coalition Government promised to rebalance the economy on both a geographical and a sectoral basis, but little progress has been made in increasing business investment and exports as a percentage of GDP. Does not the low level of business investment—which is among the worst in the world—indicate that the business community is not entirely convinced by the UK Government’s economic policy?
Mr Gauke
The reality is that business investment is increasing, by 8% this year and by 9% next year. We have also just seen some very good figures relating to manufacturing growth over the last year. The Government continue to work to secure a balanced recovery, with the support of a number of measures in the Budget, but we are already making very good progress.
Alison McGovern (Wirral South) (Lab)
13. What recent representations he has received on reform of the Office for Budget Responsibility.
Mr Andrew Love (Edmonton) (Lab/Co-op)
16. What recent representations he has received on reform of the Office for Budget Responsibility.
The Economic Secretary to the Treasury (Andrea Leadsom)
The Chancellor regularly receives representations on a wide range of matters, including the role of the independent Office for Budget Responsibility.
Alison McGovern
The Minister may have guessed that I am going to ask whether she agrees that the OBR should be allowed to audit the manifestos of all the main political parties, and I can probably guess what her answer will be, but can she explain why?
Andrea Leadsom
The hon. Lady can read my mind, Mr Speaker. Excellent!
This matter has been the subject of some debate, and, as the hon. Lady will know, it has been discussed by the Treasury Committee. I feel that, given that the Office for Budget Responsibility was established so recently, this is not the moment to start considering changing its remit. As has been pointed out by the hon. Lady’s party, it is essential for the OBR to be independent and to confer accountability on the Government, rather than becoming embroiled in party politics at such an early stage.
Mr Love
The Minister ought to be aware that it is not only the Opposition who are promoting this change in policy. The chair of the OBR himself has been sympathetic to it, and the Conservative Chair of the Treasury Committee has also been supportive. Even the Chief Secretary, who is sitting near the Minister on the Front Bench, gave us warm words during the last session of Treasury questions. It seems that the Government are isolated on this issue, but there is still time for that to change.
Andrea Leadsom
I am grateful to the hon. Gentleman for raising those points. It is true that there are those who favour the change in principle, including Robert Chote himself, but Mr Chote has also made it clear that, for very good reasons, now may not be the time for it to take place. Amending the OBR’s remit would require primary legislation, and would have huge implications for the resources available to it. We need to consider such action after the next general election, when there will be time for it to be reviewed properly in the House.
Mr Philip Hollobone (Kettering) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
Mr Hollobone
My constituents were very worried indeed when the shadow Chancellor told them four years ago that the Chancellor’s attempts to rebalance the economy would result in a 1 million increase in the number of unemployed people. Would the Chancellor be kind enough to inform the House of the actual impact of his long-term economic plan on the Kettering economy, and to explain how my constituents can look forward to a more secure financial future as a result?
Mr Osborne
Our economic plan is delivering stability, and it is now also delivering the economic growth and jobs that we all want to see. We are coming out of the very deep mess in which the shadow Chancellor and his team left the country, with the result that in Kettering the claimant count is down by 30%, and 1,500 new jobs have been created in the last year. As my hon. Friend well knows—because, as an assiduous Member of Parliament, he has lobbied hard for them—major improvements have been made in the road and rail infrastructure in the Kettering area, to ensure that there is a balanced economic recovery.
Mr William Bain (Glasgow North East) (Lab)
T3. The Chancellor spends taxpayers’ money in Brussels on defending big bank bonuses, but he has not lifted a finger in four years to deal with the falling real wages of millions of ordinary working people. Is he not just presiding over recovery by the few, of the few, and for the few?
Mr Osborne
Well, I do not think the hon. Gentleman is Abraham Lincoln, but the point I would make is that we can only see an increase in the living standards of the British people if the British economy is growing and jobs are created. That is exactly what our economic plan is delivering.
Stephen Phillips (Sleaford and North Hykeham) (Con)
T2. Further to the question from my hon. Friend the Member for Kettering (Mr Hollobone), the House will also recall that earlier this year the shadow Chancellor said:“do I think the level of public spending going into the crisis was a problem for Britain? No, I don’t, nor our deficit, nor our national debt”.As the last Government were spending more than they took in as early as 2002, does my right hon. Friend agree that this shows they still cannot be trusted to take the difficult decisions needed to control public spending and get the deficit down?
Mr Osborne
I absolutely agree with my hon. and learned Friend. [Interruption.] The shadow Chancellor is chuntering away, but this is what he said on the radio this morning: “I don’t think I’ve been too pessimistic in the last few years.” He predicted that the economy would be choked off and that jobs would be lost, but the reverse is happening. In Sleaford and North Hykeham, as my hon. and learned Friend knows, the claimant count has come down and 1,700 jobs have been created.
Julie Hilling (Bolton West) (Lab)
T4. When the Chancellor said earlier this month, “If you are hiding your money offshore, we are coming to get you”,did he mean “coming to get you to work in the Treasury”?
Mr Osborne
This Government have taken action against tax avoidance that the last Government never dreamed of taking. We have increased the resources for tackling avoidance and evasion. I will tell the House something else: we do not preside over a tax system in which cleaners pay higher tax rates than the people they work for. That was the tax system that the Labour party voted for, and we have got rid of it.
Andrew George (St Ives) (LD)
T5. I thank my right hon. Friend the Chief Secretary to the Treasury for visiting Cornwall last week, when he will have been impressed by the resourcefulness and enterprise in the Cornish economy. Will he make sure that those charged with managing the Cornwall EU structural fund programme are granted the appropriate delegated powers of intermediate body status in future?
The Chief Secretary to the Treasury (Danny Alexander)
I was indeed impressed, and also convinced by the strong support from the Cornish businesses I met for the policies the Government are putting in place to secure the long-term future of the British economy. Having announced on that visit the Government’s recognition for the Cornish identity, values and culture under the European convention, it would seem odd not to take seriously the request that there should be a degree of autonomy in the management of the European structural funds programme. I urge my hon. Friend to work with the local enterprise partnership to make that case strongly to the Government, as part of the growth deal process.
Mike Kane (Wythenshawe and Sale East) (Lab)
T6. With average wages down, ordinary working people are increasingly being driven into the arms of payday loan lenders with their usurious rates of interest. What measures are the Government taking to give ordinary working people access to fair credit?
Mr Osborne
We are introducing a cap on payday lending, and that will be an important—[Interruption.] The shadow Chancellor chuckles. He was the City Minister; he could have taken that decision at any point when he was—[Interruption.]. Why has it taken so long? Labour had 13 years to do these things—13 years when its team were running the Treasury. That is why people will not listen to what they have to say. The answer to the hon. Gentleman’s question is this: by supporting credit unions, capping payday lending and encouraging competition on the high street, we will help his constituents and many others.
Bob Blackman (Harrow East) (Con)
T8. As the economy continues to prosper and grow under the excellent stewardship of our Chancellor, will my right hon. Friend join me in congratulating the tube workers who turned up to work today to keep London moving, and in congratulating the workers who went to work this morning despite the antics of the RMT?
Mr Osborne
I join my hon. Friend in thanking those who went to work today on our tube system. The strike is totally irresponsible and unnecessary. It impacts on the economy and makes it difficult for people in London to get to work. [Interruption.] Well, perhaps the reason that so few Labour MPs are at Treasury questions is that they are manning the barricades with the RMT.
Mrs Emma Lewell-Buck (South Shields) (Lab)
T7. My constituent Mr Effard works on a zero-hours contract and does not know from week to week whether he will be given enough hours to be able to cover his bills. Mr Effard wants to work, but admits that in many ways jobseeker’s allowance provided him with more stability. Will the Chancellor admit that the normalisation of these contracts under his Government means that for people such as my constituent a job no longer guarantees financial security?
Mr Osborne
The last study on the impact of zero-hours contracts was undertaken by the previous Labour Government, who concluded that they wanted to retain the flexibility that such contracts offer to business. However, we are not satisfied that all the work has been done on this, which is why the Department for Business, Innovation and Skills is consulting on what changes potentially need to be made to zero-hours contracts. We have received a lot of representations, we are looking through them and of course we will come forward with a response shortly.
Simon Wright (Norwich South) (LD)
T9. Within a few months, Norwich will no longer be the UK’s largest city not to be connected to the dual carriageway network. Can the Chancellor confirm that the excellent progress of the coalition’s A11 dualling scheme in Norfolk is meeting Treasury expectations, and will he keep this in mind when considering destinations for further infrastructure investment?
Danny Alexander
I can confirm that the scheme is meeting our expectations. It is a major scheme for the region, with estimated investment of £102 million. The Secretary of State for Transport, who is in his place, confirms that it is on track and scheduled for completion in December 2014. I am pleased to be able to tell the House that a major milestone was delivered yesterday, as the Elveden bypass opened to traffic for the first time.
Lindsay Roy (Glenrothes) (Lab)
If the Government’s economic plan is working so well, why is the Chancellor planning to borrow £190 billion more than previously planned?
Mr Osborne
This country was borrowing £150 billion a year when this Government came to office, and we are on course to reduce the deficit by a half this year. We are taking—[Interruption.] What exactly is the Labour party’s complaint? Is it that we are not doing enough to reduce the deficit? Labour said that we were doing it too quickly and opposed all the things we proposed in recent years. Labour simply has no explanation for why the economic growth it said could not happen has happened.
Lorraine Fullbrook (South Ribble) (Con)
T10. Does my right hon. Friend agree that politicians would do well to listen to senior business figures who warn that the anti-business policies put forward by the Labour party would put jobs and investment at risk, and would prevent Britain from having a stronger, more competitive economy?
Mr Osborne
The Opposition do have an anti-business agenda, but the Government are taking a different approach. We are reducing business taxes; we have introduced an employment allowance this month which will help small companies with their jobs tax; and of course next year we are taking under-21s out of the jobs tax. Labour’s plan is now not only to increase corporation tax; the party is discussing plans to put up the jobs tax, which would be a total disaster.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Since May 2010, long-term unemployment in my constituency has increased by 27%, long-term youth unemployment has increased by 40% and average real weekly wages have decreased by £116.93. Does the Chancellor want to take credit for that?
Mr Osborne
The hard-working people of the hon. Gentleman’s constituency should take credit for the fact that unemployment is down by 21% in his constituency and youth unemployment is down by 29% there.
Mr James Gray (North Wiltshire) (Con)
Will the Chancellor join me in warmly welcoming this morning’s announcement that Dyson is to invest £250 million in expanding its headquarters in Malmesbury in my constituency and intends to employ 3,000 more people, 2,000 of whom will be high-quality engineers, designers and a large number of apprentices? Does he agree that that is hard evidence that that shrewd operator Sir James Dyson has every possible confidence in the Chancellor’s long-term economic plan?
Mr Speaker
I think the hon. Gentleman is planning an Adjournment debate on the subject. I have that distinct sense, although some people may think he has already had it.
Mr Osborne
The jobs being created by Dyson at Malmesbury are excellent news. Many people will know Dyson’s products, but its facility at Malmesbury, which I have visited, is fantastic. We went to James Dyson to ask how we could replicate some of that success elsewhere in our economy. He came forward with proposals—which became our innovation and catapult centres—to bring applied science to commercial success. We are building on the success of Dyson, not just for the people my hon. Friend represents, but for the whole country.
Fiona Mactaggart (Slough) (Lab)
How often have the Chancellor and his colleagues referred to the long-term economic plan during this Question Time? Is it because the shorter-term economic plan that he announced in 2010, allegedly to get rid of the deficit and reduce the debt by next year, has failed and he is instead adopting something much closer to the two-term offer that Labour proposed?
Mr Osborne
I have not been keeping count of how many times the long-term economic plan has been mentioned, but the hon. Lady has just added two more to the total. That long-term economic plan is reducing the deficit, which is due to be down by a half this year, seeing the creation of 1.5 million jobs in our economy and supporting the growing economy, as we have seen in the GDP numbers today.
Mr David Ruffley (Bury St Edmunds) (Con)
The elimination of the deficit by the end of the next Parliament still requires reducing general Government consumption to its 1948 level. Will the Chancellor confirm that that is in the national interest and that the Labour party does not have a snowball’s chance in Hades of achieving it?
Mr Osborne
The Labour Government left us the highest budget deficit in the peacetime history of this country. The numbers to which my hon. Friend refers assume that there are no savings in welfare. I have made it clear that I think we should consider savings in welfare. Of course, other parties, such as the Labour party, have put forward proposals to increase tax.
Nia Griffith (Llanelli) (Lab)
Given the great success of the Labour Welsh Government’s Jobs Growth Wales scheme, which is on target to help 16,000 young people into sustainable jobs, mostly in the private sector, will the Chancellor now commit to a similar UK-wide scheme funded by a repeat of Labour’s tax on bankers bonuses?
Mr Osborne
This week, the help to work scheme came into force, which is helping long-term unemployed people, providing them with more support and ensuring that those who need to sign on daily do so, and that those who need work experience and who need to be in work can take community jobs. We are reforming welfare, and that is part of the approach that we are taking to create jobs in this country by ensuring that work always pays.
Steve Baker (Wycombe) (Con)
There is no doubt that low interest rates have played a crucial part in the Chancellor’s long-term economic plan and brought about today’s widely welcomed news, but low rates will not be good news for those people who have worked hard, done the right thing and now wish to see a safe return on their cash. Will he explain to the House and to savers in my constituency what he is doing to promote their interests by supporting saving?
Mr Osborne
My hon. Friend is absolutely right that the low interest rates put in place by the independent Bank of England have made life more difficult for savers, although, of course, the growing economy is good news for savers as well as borrowers. My hon. Friend has warmly supported what we have done in the Budget, not only to give people access to their pension pots but to introduce the new ISA. We have also introduced the new savings bond for pensioners, which will come into effect at the end of the year, with higher interest rates to help those in his constituency who have worked hard and saved hard.
John Cryer (Leyton and Wanstead) (Lab)
Real wages have fallen by £1,600 since the election, so will the Chancellor now answer the question repeatedly asked by Opposition Members: will wages in real terms be higher or lower at the next election than they were at the last election?
Mr Osborne
Britain is better off because we are rescuing this country from the economic mess in which the Opposition left us. There is a complete fantasy in the Labour party, demonstrated again in the past hour, that one can have an economic policy that destroys the banks, destroys business and destroys the public finances but somehow helps the people of the country in the process. As we learned to our cost under the previous Labour Government, that is not the case. They wrecked the economy and we are recovering it.
Duncan Hames (Chippenham) (LD)
Last Friday, my right hon. Friend the Chief Secretary saw the world-class robotics engineers of Anthony Best Dynamics in Bradford-on-Avon. What is he doing to create the conditions in which such successful manufacturers can continue to grow right where they are?
Danny Alexander
I did indeed see the fantastic work at Anthony Best Dynamics, which supplies 20 out of the top 20 automotive companies in the world. Yesterday, the Deputy Prime Minister and I visited the Transport Research Laboratory to announce £500 million of support over the next five years to ensure that the United Kingdom is the best place in the world to develop and manufacture ultra-low emission vehicles.
Valerie Vaz (Walsall South) (Lab)
According to the Office for National Statistics, unemployment in the west midlands has risen to 8.2%. Can the Chancellor explain why?
Mr Osborne
The statistics for the hon. Lady’s constituency show that unemployment is down 20%, youth unemployment is down 20% and long-term unemployment is down 20%. In the west midlands, during the boom years—the unsustainable boom—private sector employment actually fell. That points to what went wrong with the previous Government—they put all the bets on the City of London, the shadow Chancellor did not regulate it properly, it blew up and we are now retrieving the situation that he created.
Jake Berry (Rossendale and Darwen) (Con)
In Rossendale and Darwen, the majority of our large employers are in the construction and manufacturing sectors. People want not just new jobs, but security and stability in those jobs. Will my right hon. Friend confirm that the latest figures show that those two sectors are growing at their fastest rate for 10 years?
Mr Osborne
My hon. Friend, who so ably represents his constituency, is absolutely right that in his constituency, manufacturing is doing better. That is because, in the Budget, we introduced a package of measures to support manufacturing and, above all, through the long-term economic plan, we are providing the economic stability that allows for investment in construction. I have every confidence that, when he takes that argument to the British people, he will see off the red princeling who is standing against him.