Oral Answers to Questions

David Gauke Excerpts

Tuesday 8th February 2011 Commons Chamber

[Fiona Bruce (Congleton) (Con)]

4. What assessment he has made of the prospects for growth of the manufacturing sector.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The independent Office for Budget Responsibility is responsible for the official economic and fiscal forecast. Returning the UK to sustainable economic growth is the Government’s overriding priority. This includes a strongly performing manufacturing sector. The Chartered Institute for Purchasing and Supply’s purchasing managers’ index for January showed the manufacturing index at a record high. This was accompanied by a rapid increase in manufacturing outputs and the fastest growth in new orders in the survey’s history.

[Fiona Bruce]

The closure has been announced of the bathroom manufacturer Ideal Standard, which is based in Middlewich in my constituency. Middlewich is a feisty town, as are its people, who want to rise to the challenge that this news presents. What support and resources can the Government provide to enable the people of Middlewich to help themselves to create jobs, develop new industries and go for growth?

[Mr Gauke]

My hon. Friend has a great deal of expertise in the business world. In the longer term, it is vital that we get the fundamentals right and have sustainable public finances, and the Government are pursuing policies that will favour growth. In the short term, obviously her constituents have our sympathy. Jobcentre Plus is able to provide a rapid response service in those areas, and I am sure that it will be acting closely with her constituents.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

A firm in my constituency manufactures parts for motorbikes, and it plans to move into the full production of motorbikes, so why have the Government decided to cut investment allowance, which will hit firms that are trying to make such moves? How can there be growth with policies that undermine manufacturing?

[Mr Gauke]

We announced in the June Budget corporation tax reductions that will benefit all sectors, including manufacturing. As we can see, so far manufacturing is doing well. Of course, we cannot be complacent, but the early signs are that our policies are helping.

[Claire Perry (Devizes) (Con)]

I want to ask the ministerial team which piece of recent data they find most interesting: the record level of manufacturing activity, the rebound in consumer confidence or the endorsement by the Institute for Fiscal Studies of this Government’s economic policy in paying off the previous Government’s debt?

[Mr Gauke]

It is absolutely clear that this Government are on the right course. There are some encouraging signs, but none the less we must stick to the course. The early indications are, in manufacturing in particular, that that sector of the economy is growing well.

[Kerry McCarthy (Bristol East) (Lab)]

We share the Government’s desire for a strong manufacturing sector, hence our disappointment at Pfizer moving overseas and the Government’s failure to support Sheffield Forgemasters. According to today’s Financial Times, the Deputy Prime Minister, despite his dismal track record on Forgemasters, is leading the drive for more bank lending to small and medium-sized enterprises to secure regional economic growth. Who is now in charge of growth policy? Is it the Chancellor or the Deputy Prime Minister?

[Mr Gauke]

It may come as a surprise to Opposition Members, but an entire Government are capable of working together. That was not the experience when the Treasury was being run by the current shadow Chancellor.

[Rehman Chishti (Gillingham and Rainham) (Con)]

5. What assessment he has made of recent trends in the size of the structural deficit.

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[Greg Mulholland (Leeds North West) (LD)]

6. If he will take steps to allow charities providing services transferred to them by the NHS to recover value added tax.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Charities, voluntary sector organisations and social enterprises make a valuable contribution to our communities. That is why the Government provide about £3 billion in tax relief for charities. There are no plans to change the rules which govern the recovery of VAT by charities.

[Greg Mulholland]

I thank my hon. Friend for that answer. The current thrust of Government thinking is that more hospices and end-of-life care services will be delivered by organisations such as Sue Ryder Care, which runs the excellent Wheatfields hospice in my constituency. When it is run by the NHS, as it is currently, it can recover 48% of VAT on non-business supplies, yet when it is transferred to organisations in the charitable sector such as Sue Ryder, it cannot. That is an anomaly that will damage the thrust of Government thinking. Will my hon. Friend meet me and representatives of Sue Ryder to discuss this matter?

[Mr Gauke]

I will happily meet my hon. Friend to discuss it. The VAT that is paid and the VAT that is recovered is taken into account in the funding of the NHS. There are difficulties in trying to resolve this issue without imposing an impractical and complex solution. That is why the focus tends to be on providing tax relief on charitable giving rather than on expenditure incurred by charities.

[Vernon Coaker (Gedling) (Lab)]

7. What objectives he has set for the outcome of his discussions to limit the bonuses paid to bankers.

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[Mr Iain Wright (Hartlepool) (Lab)]

16. What assessment he has made of the effects on consumer confidence of the recent increase in the basic rate of value added tax.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Sustainable public finances will increase consumer confidence in the medium term. The decisive action taken by the Government in the spending review and June Budget, including the increase in VAT, will put the public finances and spending on a sustainable footing.

[Mr Wright]

Given the increase in VAT and the biggest monthly fall in consumer confidence since 1992, will the Minister update the House with his assessment of job losses in the retail sector?

[Mr Gauke]

Unless we get the public finances right, there will be no long-term consumer confidence. Can we imagine what the impact would be if the Government abandoned their approach and just started spending money, like the previous Government did, and failed to tackle the deficit? I am afraid that consumer confidence would go through the floor.

[Mr Peter Bone (Wellingborough) (Con)]

Is it not right to say that to compensate for the increase in VAT, the Government have increased the personal allowance for taxpayers, so that consumers have more money to spend?

[Mr Gauke]

My hon. Friend is right to say that we have increased the personal allowance, taking 880,000 people out of income tax, resulting in an income tax cut for millions of people. It is none the less the fact that we must tackle the deficit. To the extent that the Labour party wants to do anything about the deficit, it advocates reducing the deficit by increasing taxes by more. Think what that would do.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

17. What assessment he has made of the effectiveness of support and advice on financial planning and financial literacy for young people and vulnerable groups.

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[Mr Tobias Ellwood (Bournemouth East) (Con)]

T3. Is my hon. Friend aware of recently passed US legislation—the Dodd-Frank Wall Street Reform and Consumer Protection Act—that obliges oil, gas and mineral extraction companies listed on US stock exchanges to declare how much they pay directly to a Government for the rights to mine those resources? This has a huge impact in Africa in tackling corruption, increasing transparency and stopping the backhanders that end up being given to Heads of State. Would he agree to meet me to see whether we can introduce such legislation here in the UK?

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

I am grateful to my hon. Friend for asking that question. Indeed, last week I had a meeting with representatives of leading non-governmental organisations on this matter, and the Government are actively engaged at a European Union level to see how we can progress it. He raises a fair point.

[Mr George Mudie (Leeds East) (Lab)]

T7. The Chancellor referred to the need for the regulator to have good judgment. Do Ministers think that the same regulator is using good judgment in all aspects of the retail and mortgage reviews?

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[Andrea Leadsom (South Northamptonshire) (Con)]

In the light of the recent appalling press about Her Majesty’s Revenue and Customs’ problems with PAYE and, now, with national insurance contributions matching, is the Minister as concerned as I am about the imminent introduction of online filing for companies, many of which have said that they simply lack the preparedness to deal with it?

[Mr Gauke]

I appreciate my hon. Friend’s concerns about online filing. It is the case that one of the providers has been unable to meet the timetable that HMRC set out, although a number of other software providers have been able to do so. We are seeking to ensure that we implement this in a way that is sympathetic to businesses, but we want to stick to the original timetable. Those businesses that have delivered should not be punished because of the failures of another.

[Kelvin Hopkins (Luton North) (Lab)]

Manufacturing has undoubtedly been helped a lot by the depreciation of sterling, which took place under the last Labour Government. That was only possible because Labour wisely kept us out of the euro. There is now a possibility that interest rates might rise. Will the Chancellor be putting pressure on the Monetary Policy Committee not to raise interest rates?

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[Mr David Davis (Haltemprice and Howden) (Con)]

There is a lot of public disquiet about alleged enormous sweetheart deals done with major public companies—Vodafone and others—in the last five years. Three or four months ago, I tabled a question asking how many of these deals had been done, costing more than £100 million at a time. The answer I received was that the information requested was “not readily available” and could be provided “only at disproportionate cost”. I received a similar blocking answer this morning. When is the Minister going to tell the House what HMRC has been up to?

[Mr Gauke]

The National Audit Office has investigated and examined that as a matter of course. There is no question of sweetheart deals. The reality is that HMRC is seeking to recover as much tax as is due. That is what it has done in a number of cases. I am not going to comment on individual cases. That is a matter of confidentiality; I do not get to see the details. None the less, I think wild allegations have been made against HMRC, for which there is little or no evidence.

[Alison McGovern (Wirral South) (Lab)]

I was just checking and realised that the Government’s own business planning projections show that the proportion of young people on the dole by the end of this Parliament will be reduced by less than 1%. Will the Chancellor explain what his plan is to increase the number of jobs made available to those young people?

[Stephen Williams (Bristol West) (LD)]

Following on from the question from the right hon. Member for Haltemprice and Howden (Mr Davis), many of us will have seen—and some of us, myself included, will approve of—the demonstrations organised by UK Uncut outside certain high street well-known names. What are the Government doing to tackle corporate tax avoidance schemes by some large corporates; and what is the Chancellor going to do to make sure that the actions of some well-known and popular figures, such as premiership football stars and grand prix drivers, are also tackled?

[Mr Gauke]

The fact is that over the spending review period, £900 million is devoted specifically to HMRC for improving the capability of tackling tax avoidance and tax evasion. We take the issue very seriously and we announced proposals in December to reduce the tax gap further.