Lord Hammond of Runnymede
Main Page: Lord Hammond of Runnymede (Conservative - Life peer)Department Debates - View all Lord Hammond of Runnymede's debates with the HM Treasury
(7 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Matt Warman (Boston and Skegness) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
The Government are taking action to give the UK the world-beating digital infrastructure that it needs. Broadband across the country has been transformed by the Government-led £1.7 billion superfast programme, extending coverage at 24-plus megabits per second to 95% of UK premises by the end of this year. At autumn statement 2016, we committed over £1 billion more to support the market to deliver full-fibre broadband networks, to enable 5G mobile and to keep Britain at the forefront of the development of the internet of things.
Matt Warman
The reduction in business rates on new fibre roll-out is hugely welcome, but will the Chancellor assure me that we will incentivise the roll-out of more fibre in such a way that no tax is paid until the fibre is first used, rather than from when it is first installed?
Mr Hammond
The Government’s clear intention is to incentivise investment in fibre broadband networks. The Department for Communities and Local Government will shortly publish a consultation on the implementation of this relief, which will set out more detail on how new fibre will be defined, and we look forward to the responses to that consultation.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Why does the Chancellor not shake up some of his colleagues, and start investing in the digital infrastructure in the north of England, in Yorkshire in particular? Will he also look at other infrastructure, such as railways? When are we going to get the electrification of the TransPennine Express route?
Mr Hammond
At autumn statement, we announced £23 billion of additional investment in our infrastructure, and key priority areas such as research and development, specifically designed to address the UK’s productivity problem. This investment has to be spread across the whole of the UK economy to make sure that we deliver improved productivity and improved economic growth across the economy as a whole. Such investment is going in: public capital investment will be at a higher level in this Parliament following the announcement of this decision than it was before the financial crisis.
Sammy Wilson (East Antrim) (DUP)
While the Government boast about the speed of fibre broadband across the United Kingdom, there are many areas—especially in parts of my constituency—where sending mail by pigeon would almost be quicker than sending it through the fibre network. What action does the Chancellor intend to take to ensure that farmers, small businesses and others relying on digital means of communication in rural areas have a greater ability to deliver such messages?
Mr Hammond
I cannot speculate on how fast the pigeons are in the hon. Gentleman’s constituency, but I can tell him that all consumers now have a right to 10 megabits broadband. By the end of this year, 95% of properties will have access to 24 megabits broadband. The Government are investing more money to reach the last 5%, the hard-to-reach that are often in rural areas.
Stewart Hosie (Dundee East) (SNP)
In Scotland, the original plan was as for the UK: 95% coverage by this year, additional funding for rural areas, money for wi-fi in public buildings and a superfast broadband target of 100% property coverage by 2021. Given that this should be a common endeavour, will the Chancellor welcome the steps taken in Scotland to deliver on those performance targets?
Mr Hammond
We have a UK-wide target. We of course welcome any other actions taken on top of that to achieve yet higher levels of broadband penetration. That is a very positive move for the economies of the regions and nations they affect.
Stewart Hosie
I thank the Chancellor for that. However, the issue is not simply about the provision of infrastructure, but paying for digital usage. Will he give a guarantee to the House that when the UK Government enter the Brexit negotiations there will be no return to the super-expensive roaming digital phone charges for UK citizens working and living in the EU, and for EU citizens living and working in the UK?
Mr Hammond
I hear the hon. Gentleman’s concern and I am absolutely sure that the vast majority of our constituents would agree with his suggestion that we seek to maintain cost-effective access for UK phone users whenever they are roaming within the EU. I think that will be an issue for this Parliament post-Brexit unless we choose, in the course of the exit negotiations, to reach a reciprocal agreement with the European Union.
Helen Hayes (Dulwich and West Norwood) (Lab)
Rishi Sunak (Richmond (Yorks)) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
The Government are supporting economic growth across the whole country as a key part of our productivity agenda by investing in infrastructure and skills, and by developing our industrial strategy. At the autumn statement, I launched our northern powerhouse strategy and earlier this year set out our midlands engine strategy. We recently allocated a further £1.8 billion from the local growth fund and an initial tranche of £185 million of local transport funding across the English regions.
Rishi Sunak
From Merseyside to Teesside, ports are a great northern success story. Will my right hon. Friend look into the potential for the creation of free ports throughout the United Kingdom? Free trade zones would increase trade, create manufacturing jobs and boost regional growth, which are all key ingredients of our future economic prosperity.
Mr Hammond
My hon. Friend has made the case for free ports, and the Government have heard that case very clearly. We will consider all options that have the potential to support our ambition to see Britain as a great global trading nation, but before making any decisions we shall need to consider carefully not only the advantages that free ports can deliver, but the costs and potential risks associated with them.
Rachel Reeves (Leeds West) (Lab)
If towns and cities in our economy—including those in the north of England —are to flourish, we need banks and building societies that support them. Does the Chancellor agree that those banks and building societies should keep their branches open? Leeds Building Society has just announced that it will close its branch in Armley Town Street, which is in my constituency, following the closure of branches of HSBC and Yorkshire Bank in the last two years.
Mr Hammond
Of course we want there to be a viable branch banking network across the country, but we must recognise that the nature of banking is changing. More and more of us are using online digital banking, and that is bound to be reflected in the configuration of the branch networks that the banks operate.
Mr Steve Baker (Wycombe) (Con)
As the entrepreneurial heart of England, Buckinghamshire provides an excellent bridge to the east midlands and beyond. Will my right hon. Friend look into how investment in Buckinghamshire can help to stimulate growth throughout the country, not just in London and the south-east?
Mr Hammond
I am sure you are delighted, Mr Speaker, that my hon. Friend has lighted on the key role of Buckinghamshire as a bridge between the north, the south, the east, the west and every other part of the country. I should be happy to receive, and I confidently predict that I will receive, my hon. Friend’s detailed submission on the case for greater infrastructure investment in Buckinghamshire.
Steven Paterson (Stirling) (SNP)
Mr Hammond
As the article 50 notice letter set out very clearly, the Government are seeking to negotiate a deep and special partnership with the European Union, at the heart of which will be a comprehensive free trade agreement covering goods, services and networks. That will allow us to continue to work closely with the European Union after leaving the organisation.
The Government do carry out detailed analysis to inform their negotiating strategy, but I am sure the hon. Gentleman would not want me to reveal the outcome of that analysis, which would be of great use to our negotiating partners on the other side. That is not the way to get the best deal for Britain in these negotiations.
Tom Pursglove (Corby) (Con)
In Corby, there is a huge appetite for a new enterprise zone to help to boost jobs and growth further. What consideration has my right hon. Friend given to the introduction of a new round of opportunities?
Mr Hammond
My hon. Friend has made an important suggestion, and I will undertake to look at it carefully. No doubt an exercise will take place over the next few weeks that will involve our thinking about what commitments we want to make for the future, and I will take his question as a representation.
Peter Dowd (Bootle) (Lab)
An important driver of economic growth, both inside and outside London and the south-east, is productivity. Notwithstanding the rosy picture painted by the Chancellor, the Financial Times’s chief economist says that our productivity performance is “calamitous” and that the disparity in performance has widened regionally. Who do we believe, a respected economist or a backtracking Chancellor?
Mr Hammond
I do not recognise the picture that the hon. Gentleman paints of my position. I have stood at this Dispatch Box on countless occasions and lamented the fact that Britain has a poor productivity record—worse than Germany’s, and worse than those of the United States, France and Italy—but simply lamenting that fact is not enough. What we must do is put together a plan for tackling it, and it will be a long—
Mr Hammond
If the right hon. Gentleman checks the records, he will discover that this problem has existed for 40 years. It would be better if we tried to tackle this challenge in a spirit of bipartisan recognition and if we both recognised that there is a real problem that we have to tackle by investment in infrastructure, by investment in skills and by actions to spread growth and prosperity across the country.
Peter Dowd
Yes, seven years.
Although the £6 billion investment for a new two-mile lower Thames crossing is welcome, how does such imbalanced infrastructure spending help to close the economic gap of regions outside London and the south-east? Does not that simply reaffirm the Government’s pathological incapacity to see much beyond the M25? I will be happy to buy the Chancellor a satnav if he wants to take the opportunity to use it.
Mr Hammond
I am not going to take any lectures from the hon. Gentleman on regional awareness, but perhaps he should speak to the Mayor of London, who has a view on infrastructure investment and what should drive it. The Government are clear that we need to spread infrastructure investment around the country in a way that will tackle the productivity challenge. One of the ways we will tackle it is by harvesting the benefits of our city regions in the west midlands, in the northern powerhouse and elsewhere, which evidence across the developed world has shown can be major drivers of productivity improvement. That is what we have to focus on.
Rob Marris (Wolverhampton South West) (Lab)
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
The Chancellor of the Exchequer (Mr Philip Hammond)
We’ll see how lucky, Mr Speaker.
The Government have undertaken a significant amount of work to assess the economic and fiscal impacts of leaving the EU, and they continue to carry out that work. This is part of a continuing programme of analytical work covering a range of possible exit scenarios, including sectoral analysis, but I have to say to the House that we are seeking the best possible deal for the United Kingdom, recognising that there is a range of possible outcomes to the negotiations, and the work being done reflects this. The Government have also committed to keeping Parliament informed, but it would not be appropriate to publish analysis that risks undermining our negotiating position.
Toby Perkins
Throughout the last seven years, the needs of the British people have had to play second fiddle to the needs of the Conservative party. As a result, the Chancellor has been forced to disown the manifesto commitment to balance the Budget in this Parliament. Is it not the truth that today’s announcement about a general election is another example of this Government putting their party’s interest ahead of the country’s interests at a time when there is a desperate need for stability in this country?
Mr Speaker
The question is about the departure from the EU and the effect thereof on the public finances.
Mr Hammond
In terms of the effect on the public finances, the decision that the Prime Minister made today is very much in the national interest, to strengthen her hand as she goes into the negotiation with the European Union, to provide a clear mandate for the type of exit that she set out in the letter she wrote to President Tusk two and a half weeks ago, and to ensure that the UK can negotiate its exit from the European Union, execute that exit, and then transition to the new arrangements with a clear run before the next general election.
Gerald Jones
After that party political broadcast on behalf of the Conservative party, may I ask the Chancellor a very serious question? Many billions of pounds of EU structural funds are invested annually in the UK, particularly in our deprived areas and regions. Wales, and Merthyr Tydfil and Rhymney, have benefited significantly from this funding. What steps will he take to replace this essential investment when we leave the EU?
Mr Hammond
As we have said on many previous occasions from this Dispatch Box, we recognise that alternative arrangements will have to be put in place. We will no longer be making large subscriptions—payments—into the European Union, but on the other side of the equation we will no longer be receiving some of the funding that we have been receiving for many years, including the structural funds. That places the opportunity back in the hands of this House—this Parliament—to decide how we should use our taxpayers’ funding to achieve the objectives of the UK Government and to achieve economic development in the way that is most appropriate for the UK.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
Does my right hon. Friend look forward to getting net £10 billion a year into the Exchequer, and does he note that the claims for tens of billions of euros from our friends in Brussels merely illustrate the financial incontinence on the continent?
Mr Hammond
Any Chancellor would always welcome any net tens of billions of pounds, or even any net billions of pounds, from pretty much any source whatsoever. In terms of the numbers bandied around in Brussels relating to the so-called exit charge, we should recognise them for what they are: an opening gambit in what will be a long and complicated negotiation—nothing more, nothing less.
Chris Philp (Croydon South) (Con)
Does the Chancellor agree that, whether inside or outside the European Union, the best way of delivering strong public finances is a strong economy supported by low tax and low regulation, and is that the future we can look forward to?
Mr Hammond
The only way of delivering strong public finances is through a strong economy, with sensible and balanced regulation. We have a very large financial services sector in this country, which is a very important contributor to our fiscal balances, and its success depends on our getting that regulatory equation exactly right: too much regulation and we would drive away industry from London; too little regulation and we may lose our reputation as a safe and secure place to do business. We have to get it right.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
The Chancellor recently said that Brussels had set out a very aggressive starting line on the UK’s bill for quitting the EU. What assessment has he made of the worst case scenario, reported to be in the region of €60 billion, and what impact would that have on public finances?
Mr Hammond
I am not sure what the worst case scenario that the hon. Lady is talking about relates to. We have heard various figures bandied around in Brussels in terms of an exit charge. The work that the Government have been doing—which I was asked about earlier—relates to the economic and fiscal impact of different possible exit scenarios. The numbers being bandied around in Brussels are simply a question of a potential demand which would be raised in the negotiating process, but they are simply that: a negotiating strategy.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I agree with the Chancellor that one of the biggest contributors to the UK’s public finances is the tax revenue that we receive from the financial services sector. Now that we have had the triggering of article 50 and the Government’s White Paper, will he tell us whether he is confident that that revenue will not be significantly reduced, either through the loss of jobs or the loss of any major areas of financial activity?
Mr Hammond
Yes; the negotiating strategy and the objectives that we have set out in the article 50 letter would create an environment in which the financial services industry in the UK would be able, by and large, to continue the levels of commercial activity that currently take place with the European Union 27. But of course that will depend on negotiating the right arrangements with the European Union, and it is essential that we go into these discussions in constructive mode, recognising that there are real issues on both sides and that the UK’s financial services industry is an asset not only of the UK but of the whole of the continent of Europe. European businesses depend on those financial services.
Jonathan Reynolds
I share the Chancellor’s assessment that there is a mutually beneficial deal for us and the EU to agree on, if this Government have the ability to deliver it. Will he therefore state unequivocally that, as a result of the deal that the Government will seek to negotiate, there will be no significant loss of jobs in any major financial institutions, no removal of any major City-wide functions such as clearing, and no relocation of any EU-wide regulatory agencies such as the European Banking Authority?
Mr Hammond
On the hon. Gentleman’s last question, the location of the European Union’s agencies is clearly a matter for the European Union. We cannot credibly seek to leave the European Union and at the same time dictate to it where it should locate its agencies. On the initial items on his list, it will indeed be the UK Government’s objective, as we go into the negotiations, to protect our financial services sector.
Kelvin Hopkins (Luton North) (Lab)
Since the EU referendum, the substantial sterling depreciation has seen exports increase and the balance of trade deficit reduce from £13.7 billion in quarter 3 of last year to £5 billion in quarter 4. However, the Chancellor has repeatedly said that he is not concerned about the exchange rate. Is it not just plain wrong to dismiss the significance of the exchange rate?
Mr Hammond
I have never said that I was not concerned about the exchange rate. I have said that the Government do not take a view on what the appropriate exchange rate should be; that is very much a matter for the markets to determine. I am sure that the hon. Gentleman will have been delighted to note that my right hon. Friend the Prime Minister’s statement this morning has sent sterling up in the markets, demonstrating the confidence that the markets have in a future for this country under a Tory Government with a new mandate.
Susan Elan Jones (Clwyd South) (Lab)
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
The Chancellor of the Exchequer (Mr Philip Hammond)
My priority is to ensure that the economy remains stable and resilient as we conduct our negotiations with the European Union. That means building upon this Government’s achievements in reducing the deficit by two thirds and getting unemployment down to the lowest rate since the 1970s, while tackling the long-term challenges of productivity enhancement and making steady progress towards our goal of a balanced budget. I am pleased to be able to tell the House that in the past few minutes the International Monetary Fund has upgraded its UK growth forecast for 2017 by 0.5%, to 2%.
Dr Poulter
Farms and other agricultural businesses are often deterred from making investments in new buildings and infrastructure because of a complex system of capital allowances, including agricultural buildings relief. Will my right hon. Friend examine this issue, particularly in respect of giving the agricultural sector a boost in the wake of Brexit?
John McDonnell (Hayes and Harlington) (Lab)
As you know, Mr Speaker, this morning the Prime Minister called a general election. She is breaking her commitment not to hold an early election, which was made only weeks ago. She has blamed Brexit, she has blamed our European neighbours and she has blamed the Opposition parties, but the real truth is that after seven wasted years of failure the Tories have failed to close the deficit; they have added £700 billion to the national debt; pay has fallen behind prices; 4 million children are growing up in poverty; our schools are in crisis; more people than ever are on NHS waiting lists; more families are homeless; and more elderly people are not getting the care they need. Will the Chancellor use this last opportunity before the election to apologise to the British people for the utter failure of this Government’s economic policies and for the pain he has inflicted on this country?
Mr Philip Hammond
The right hon. Gentleman has some brass neck to stand there and accuse us of having failed to eliminate the deficit, given that his policy is to add another £500 billion to it overnight. The British people understand very well what is going on here: we have a Conservative Government who are maintaining growth, and who have got unemployment down and record levels of employment, and a steadily closing deficit; and we have a Labour party which remains as fiscally incontinent as ever and which, if given a chance, would wreck this economy once again.
John McDonnell
There we have it: not one word of apology—no contrition whatsoever—from a Chancellor who has broken his promises to the British people and is still failing to deliver on a manifesto on which he was elected only 23 months ago. The Government are entering this election having scheduled £70 billion-worth of tax giveaways—for whom? It is for the super-rich and for the corporations, and is over the next five years. The Government are entering an election with a £2 billion unfunded black hole in the Budget the Chancellor delivered only a few weeks ago. So will he now use this opportunity before the general election to put on the record that his party will rule out raising VAT and rule out raising income tax? Will he commit unequivocally to support legislation to protect the triple lock? If the Tories cannot be straight with the British people, Labour will be.
Mr Hammond
The truth is that promises made from the Opposition side of the House are not worth the paper they are written on. The voters, pensioners and workers of this country understand that very well, and they will give their verdict on Labour’s promises on 8 June.
Mr Andrew Tyrie (Chichester) (Con)
Assuming the House votes for an election, will the Chancellor confirm that he will seek to truncate the Finance Bill, remove its controversial measures, such as making tax digital, and thereby enable everybody to focus on the economic issue that will matter most to the whole country over the next few months: which party can best be trusted to run the economy?
Mr Hammond
I certainly agree with my right hon. Friend on that last point. On the matter of process, assuming that the House votes in favour of my right hon. Friend the Prime Minister’s motion tomorrow, there will then be the usual end-of-Parliament process of negotiation with the official Opposition on measures that are currently before the House, with a view to passing them in whatever form is appropriate before prorogation.
Several hon. Members rose—
Ian Blackford (Ross, Skye and Lochaber) (SNP)
Mr Hammond
I can confidently predict for the hon. Gentleman that, after the general election on 8 June, there will be a Budget that will give him the answers he is seeking.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Gareth Snell (Stoke-on-Trent Central) (Lab/ Co-op)
Mr Philip Hammond
We are very keen on employees having an opportunity to take a stake in the businesses for which they work. We will look carefully at any proposals that would tend to enhance productivity by incentivising and encouraging employees.
Sir Henry Bellingham (North West Norfolk) (Con)
Kate Hollern (Blackburn) (Lab)
Mr Philip Hammond
The hon. Lady will know that my right hon. Friend the Secretary of State for Education is considering responses to the consultation on the school funding formula. At the Budget, we announced a substantial increase in funding for 16-to-19 technical education, which will make an important contribution to improving the UK’s productivity.
Mr Andrew Turner (Isle of Wight) (Con)
Mr Hammond
I know that my hon. Friend regards the islands as particularly important, and I concur with him on that. The Government support continuing economic growth across the south-east, including all regions and islands. The Solent local enterprise partnership receives more than £180 million from the local growth fund, including funding for investment in local skills and business start-ups, with the Isle of Wight receiving about £15 million of investment in local infrastructure and skills.
Jim Shannon (Strangford) (DUP)
Will the Chancellor give us an assurance that he will not surrender to the outrageous demands of Tusk, Juncker and Barnier that the UK must pay €60 billion before it leaves the EU?
Mr Hammond
As I have already said, this should be seen for what it is: an opening gambit in a long and complex negotiation.
Peter Aldous (Waveney) (Con)
Mr Philip Hammond
I am afraid that the hon. Gentleman will just have to contain himself and ready his money, because he will be able to buy a copy in due course.
Matt Warman (Boston and Skegness) (Con)
Mr Hammond
We are making real progress in realising our holdings in the banking sector. We continue the programmed sale of our shareholding in Lloyds, which is now down from 43% to less than 2%. Just last month, we sold £12 billion of Bradford and Bingley mortgages in a highly competitive process. The Government are not at present actively marketing their stake in RBS. Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous Government paid for them. We must live in the real world and make decisions on the future of our holding in RBS in the best interest of taxpayers.
Mr Dennis Skinner (Bolsover) (Lab)
In the real world, seven years ago, a Tory Chancellor stood at the Dispatch Box and said that we had to cut the money to every single local authority in Britain by up to 40% because we needed to get rid of the deficit. Now, seven years later, that deficit is still more than £60 billion. Will the Chancellor apologise to the people of Britain for that lousy mistake?
Mr Hammond
That deficit is still £60 billion, but it was £200 billion when we started working on it.
David Morris
In my constituency I held a public consultation on creating an enterprise zone or a business park. The Labour county council has blocked it considerably and constantly. Would my right hon. Friend the Chancellor like to come to my constituency and listen to what my constituents are saying about having an enterprise zone?
Mr Philip Hammond
As it happens, I was just planning my domestic travel arrangements for the next five weeks, and I will keep my hon. Friend’s request in mind when I do that.