Oral Answers to Questions

Lord Hammond of Runnymede Excerpts

Tuesday 27th February 2018 Commons Chamber

[Graham P. Jones (Hyndburn) (Lab)]

3. Whether he has reviewed his Department’s procedures for authorising and monitoring private finance initiative contracts as a result of the liquidation of Carillion.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

I am sure that the hon. Gentleman knows this, but just to put it in context, the vast majority of all current PFI projects—86%—were signed under the previous Labour Government. Since coming into office in 2010, this Government have reformed the approach, so that now PF2 contracts deliver better value for money for taxpayers. The performance of PFI contracts, including those where Carillion is involved, are monitored by the procuring authorities. New PF2 contracts will be subject to a rigorous value for money assessment. There are currently no PF2 projects in procurement.

[Graham P. Jones]

I am concerned about the workers. Apparently, 90% of Carillion’s private sector contractors have suggested that they will continue to pay staff, but only in the interim period. What about the 10% who are not going to be paid, and what is going to happen to the staff after the interim period? Are the Government going to guarantee the employment status and pay of those individuals?

[Mr Hammond]

The hon. Gentleman may be slightly confusing PFI contracts with outsourcing contracts that do not involve capital structures. The resolution of Carillion continues. So far, there has been a very high rate of uptake by private clients of Carillion to continue the services that are being delivered, and we have high hopes of protecting the vast majority of the jobs involved.

[Alex Burghart (Brentwood and Ongar) (Con)]

What are the Government doing to improve transparency in public-private partnerships?

[Mr Hammond]

We absolutely value transparency in the public-private partnerships that are delivered. They are an important part of the overall infrastructure. As I just explained to the House, there are currently no PF2 projects in procurement. That indicates that we have set the bar for value for money in public-private partnerships very high, and we will continue to do so.

[Mr Speaker]

Order. This is a rather extraordinary state of affairs. I hope that the hon. Member for Hyndburn (Graham P. Jones) is not indisposed, and if he is I am sorry, but otherwise there is absolutely no basis for his leaving the Chamber during the exchanges on his question. That is a rank discourtesy to the House—and a discourtesy to the Chancellor as well, for that matter. It must not happen.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

The shadow Chancellor recently wrote to the Chancellor asking when he will produce revised value for money guidance, as highlighted by the National Audit Office; an updated list of PFIs, as existing data is nearly two years old; and details of any assessment the Treasury carried out on Carillion’s readiness to fulfil its PFI contracts. When will we get them?

[Mr Hammond]

I have not yet received a letter from the shadow Chancellor, but if he has written to me, I shall of course reply to him and answer his questions.

[Damien Moore (Southport) (Con)]

4. What recent assessment the Government have made of the effect of the national productivity investment fund on road and rail infrastructure in the north-west.

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[Giles Watling (Clacton) (Con)]

8. What plans the Government have to invest in major infrastructure during the 2017 Parliament.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

As my hon. Friend the Exchequer Secretary to the Treasury has just told the House, there has been more than £0.25 trillion of public and private investment in infrastructure since 2010. We continued to invest in infrastructure in the autumn Budget 2017 by expanding the national productivity investment fund, so that it will now provide £31 billion of additional investment, including more than doubling the housing infrastructure fund to £5 billion. The Institute for Fiscal Studies said after the Budget that our plans will see public investment increase to levels not sustained in 40 years.

[Julian Sturdy]

Through the major road network, vehicle excise duty will be made available for investment in strategic roads outside the remit of Highways England. I understand that economic growth must be a priority, but how much will the pressure of future housing developments be considered in any of these future schemes? My constituency in York, for example, is surrounded by the northern ring road and we have a lot of housing coming forward.

[Mr Hammond]

My hon. Friend is right that the major road network will support the creation of new housing developments by improving access to future development sites and boosting suitable land capacity, so investment decisions for this funding will include consideration of how proposed schemes will unlock land for housing developments, helping to improve how transport is planned for new developments at the outset. The ring road to which he refers is, of course, part of the proposed major road network.

[Priti Patel]

The Chancellor will know of the great eastern main line taskforce, which has made the economic and business case for rail infrastructure directly to the Treasury. He will also know that Greater Anglia commuters are forking out £3.7 billion to the Treasury under the current rail franchise. Will he ensure that we can get some of that money back out to invest in the much-needed infrastructure improvements for which our commuters are campaigning?

[Mr Hammond]

My right hon. Friend is a great champion of infrastructure in Essex, and I share her wish to create a more dependable railway with an increased focus on punctuality and reliability, which is why the Government are pursuing the biggest rail investment programme since Victorian times. Under the Greater Anglia franchise, there is a commitment to deliver more services and faster journey times, including two “Norwich in 90” trains each way a day from May 2019. The great eastern main line proposals are currently at an early stage of development, but we will carefully consider the case she has made for the passing loop.

[Giles Watling]

Will the Chancellor update the House on the steps being taken to ensure the Government’s ambitious plans for housing are supported by local infrastructure investment, such as through the housing infrastructure fund?

[Mr Hammond]

My hon. Friend is right to observe that we cannot build the homes this country needs without infrastructure. Often, the push-back from local communities against the idea of accommodating greater numbers of homes is caused by the fear that infrastructure will not keep pace. The autumn Budget 2017 more than doubled the housing infrastructure fund, taking it to a total of £5 billion. On 1 February 2018, we announced the first £866 million of investment from that fund to support 133 projects, which will unlock infrastructure for up to 200,000 new homes.

[Rachel Reeves (Leeds West) (Lab)]

It is now two years and two months since the Boxing day floods hit much of Yorkshire, including my constituency. Kirkstall in Leeds is no better protected from floods than it was on Boxing day 2015, and the Government still have not signed off money for the phase 2 Leeds flood alleviation scheme. When will that happen? The scheme is urgently needed to protect my constituents and local businesses from devastating floods such as those that we have already experienced.

[Mr Hammond]

My constituency has also been affected by flooding, and some of the responses are major engineering projects that take time to develop. The Department for Environment, Food and Rural Affairs and the Environment Agency have funding for flood relief projects, but those developments have to be prioritised and worked up into proper business cases. I will look at the specific case the hon. Lady raises and, if I may, I will write to her and place a copy of my letter in the Library of the House.

[Sir Vince Cable (Twickenham) (LD)]

Some of the most important national infrastructure projects include the network of tidal lagoons for low-carbon energy. As the Treasury has, apparently, approved the project as good value for money, why is it allowing dinosaurs in the Department for Business, Energy and Industrial Strategy to block it?

[Mr Hammond]

I imagine that the right hon. Gentleman is referring to the Swansea Bay tidal lagoon project which, as he knows, is under consideration by the Government. An announcement will be made in due course.

[Clive Lewis (Norwich South) (Lab)]

Contrary to the Treasury’s own assessment, a report by the Institute for Public Policy Research North recently found that transport investment in London is two and a half times higher per capita than in the north. We know that in Norwich Britvic is shedding hundreds of jobs, citing poor transport as a key cause. That inequality hurts business and local authority revenue, so what actions will Ministers take to redress this unjust imbalance? Will they commit to working with the Mayors of Manchester and Liverpool on the convention for the north that was announced this morning?

[Mr Hammond]

I just do not recognise or agree with the hon. Gentleman’s figures. The Infrastructure and Projects Authority’s analysis shows that infrastructure investment per capita in the north is actually higher than in the south-east.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

21. The Chancellor has spoken out in favour of rebalancing the economy via a fairer distribution of transport spending. Will he therefore consider Transport for the North’s strategic transport plan, which calls for a 50% increase in transport spending across the north of England?

[Mr Hammond]

The Government are committed to the northern powerhouse project and recognise that that has to be supported through infrastructure investment. We are looking at northern powerhouse infrastructure investment projects on a case-by-case basis, and we will continue to support the development of the northern powerhouse.

[Geraint Davies (Swansea West) (Lab/Co-op)]

6. What recent assessment he has made of the effect on the economy of the UK leaving the single market and the customs union.

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[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

10. What recent discussions he has had with the Secretary of State for Exiting the European Union on the Government’s preliminary EU exit analysis; and if he will make a statement.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

The cross-Whitehall analysis referred to is provisional internal analysis—it is part of a broad, ongoing programme of analysis—and further work is in train. The analysis has been developed as a tool to inform Ministers on the European Union Exit and Trade Committee and its Sub-Committees about the choices that must be made as negotiations progress.

[Catherine McKinnell]

I thank the Chancellor for that answer. Does he agree with the former permanent secretary at the Department for International Trade that giving up the single market and the customs union is like giving up a three-course meal for a packet of crisps in the future? If not, can he identify what specific evidence his Department has seen to suggest that the benefits of future trade agreements will outweigh the damage of leaving the single market and the customs union to businesses and jobs across the country, particularly in the north-east?

[Mr Hammond]

The Government intend to maintain the greatest possible access for British businesses to European Union markets. The hon. Lady is right that we should approach this on the basis of evidence. We should look for evidence of the value of our trade flows with Europe and what jobs they generate in the UK, and we should look objectively at the opportunities that arise with third-country trade deals and with the likely profile of the new jobs, trade and opportunities that can be created, and then weigh those carefully.

[Kirsty Blackman (Aberdeen North) (SNP)]

Leaks from the Brexit analysis show that UK Government borrowing will rise dramatically under Brexit, with figures ranging from £45 billion to £120 billion in a worst-case scenario. Can the Chancellor reassure us that he will not cut vital public services to plug this gap?

[Mr Hammond]

As the hon. Lady knows, the analysis to which she refers is based on standardised, off-the-shelf trade models. The Government are seeking a bespoke deal with the European Union to deliver a deep economic partnership, which would have a completely different set of outcomes. That remains our objective.

[Nick Thomas-Symonds (Torfaen) (Lab)]

11. What equality impact assessments his Department has undertaken on the Government’s policy on the public sector pay cap.

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[Antoinette Sandbach (Eddisbury) (Con)]

13. What assessment his Department has made of the potential merits for the economy of the UK adopting an EEA Norway-style arrangement after the UK leaves the EU.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

Membership of the European economic area would require free movement of people with the rest of the European Union, and the UK Government have been clear that the free movement of people cannot continue as it does now. We are seeking a bespoke, comprehensive and ambitious economic partnership in the mutual interests of the UK and the EU.

[Antoinette Sandbach]

The Government’s own forecast suggests that a no-deal Brexit will cut GDP growth by 12% in the north-west of England. What steps is the Chancellor taking to minimise the impact of a no-deal, WTO-terms Brexit on my constituents in Eddisbury?

[Mr Hammond]

As I said in answer to a previous question, the figures to which my hon. Friend refers are based on standardised trade models, not the bespoke deal that we are seeking to achieve. She asks what steps I am taking to protect her constituents’ interests. I am supporting my colleagues in seeking to negotiate an ambitious economic partnership with the EU that delivers the maximum possible benefits for both the EU and the UK.

[Thangam Debbonaire (Bristol West) (Lab)]

What assessment has the Chancellor made in particular of the potential benefits of EEA membership for the £91.8 billion contribution to the UK economy made by the creative industries that are so important for my constituents in Bristol West?

[Mr Hammond]

The hon. Lady is absolutely right that the creative industries are one of Britain’s great success stories. More broadly, our services sector is our strategic strength in many respects. As we negotiate our future relationship with the European Union, we have to ensure that we protect not only the market in goods, but the market in services, where Britain has such significant comparative advantage.

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[Sir Hugo Swire (East Devon) (Con)]

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

[The Chancellor of the Exchequer (Mr Philip Hammond)]

My principal responsibility is to ensure economic stability and the continued prosperity of the British people, and I will do so by building on the plans set out in the autumn Budget. This Government are determined to meet the important challenges we face and to seize the opportunities ahead as we create an economy fit for the future. Our balanced approach to the public finances enables us to give households and businesses support in the near term and to invest in the future of this country, while also being fair to the next generation by reducing a national debt that remains far too large.

[Sir Hugo Swire]

Reducing tourism VAT to 5% after we leave the European Union would create an extra 121,000 jobs and £4.6 billion in revenue to the Treasury over 10 years. It would be a great boost not only to our great cities, but to our great coastal towns, such as Exmouth, Sidmouth and Budleigh Salterton in my East Devon constituency. Will the Chancellor commit to looking again at this issue as we leave the EU?

[Mr Hammond]

My right hon. Friend is nothing if not persistent and consistent. I cannot remember how many times he has raised this issue. There have been numerous requests for new VAT reliefs since the referendum, some of which are currently not permitted under EU law. We have calculated that if we were to grant all the VAT relief requests that we have received, that would come to more than £38 billion a year. The Government have received representations on VAT and tourism, and we are looking again at the case for change.[Official Report, 1 March 2018, Vol. 636, c. 6MC.] We have issued a call for evidence on the impact of VAT and air passenger duty on tourism in Northern Ireland, and we will certainly keep this issue under careful review.

[Peter Dowd (Bootle) (Lab)]

The Chief Secretary gave a speech last year calling for better value for money from the public finances and not spending money we do not have, and she has talked about not wasting money today, so how can she justify spending hundreds of millions of pounds on further tax giveaways worth £2,000 per child to the wealthiest families—those, for example, using private schools—via the tax-free childcare scheme? Is that not a waste of money and spending money we do not have?

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[Mr Philip Hammond]

The Government are continuing with detailed preparations for all possible March 2019 scenarios, including ensuring that Departments have adequate resources to prepare effectively for EU exit. To date, the Treasury has allocated to Departments nearly £700 million for preparation activity, and we are currently in the process of allocating the 2018-19 funding from the additional £3 billion over two years that I announced at autumn Budget 2017.

[Lilian Greenwood (Nottingham South) (Lab)]

T4. “The health and social care system has been pushed to its limits in recent weeks”—those are not my words, but those of my local hospital trust. Last month, it was forced to cancel about 325 operations and 640 outpatient appointments. That not only means that my constituents who are unwell or in pain are being made to wait longer for treatment but makes the trust’s already challenging financial situation even worse. When is the Chancellor going to give our health and social care system the sustainable funding it needs?

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[Stephen Hammond (Wimbledon) (Con)]

Will my right hon. Friend tell the House what assessment the Treasury has made either separately or jointly with the Department for Transport of how external initiatives on competitiveness and investment might help the rail sector and Network Rail in particular?

[Mr Philip Hammond]

Strictly, this is an issue for my right hon. Friend the Transport Secretary, and he is looking at how to improve productivity in the railway and how to ensure that every pound we invest in the railway delivers the maximum possible benefit to railway users. He will make further announcements in due course.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

T8. Could the Chancellor set out the benefits or otherwise of the arrangements the Government appear to have for a customs union between Camden, Islington and Westminster?

[Mr Hammond]

I am sure that when I go home and reflect on it, the deep meaning of that question will become clear to me. What I will say to the hon. Lady is that if we look at how goods and services flow freely between different parts of our own economy, and indeed between different parts of the United Kingdom, we see at once the huge benefit that it brings to have frictionless borders as we move our goods and services.

[Sir Patrick McLoughlin (Derbyshire Dales) (Con)]

I am very much in favour of gift aid, but some large charities say that they receive no direct support from Government but do receive gift aid and the Exchequer will not publish those figures. Will the Chancellor reconsider this?

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[James Cartlidge (South Suffolk) (Con)]

If we want a sustainable rise in wages, we will need higher productivity. Does my right hon. Friend therefore welcome the recent improvement in the figures?

[Mr Philip Hammond]

Yes. We have had two quarters of good productivity data, but we should recognise that the productivity challenge we face is long term. The Government have taken a range of measures to address it and we will watch the evolution of the data very carefully, but there is certainly absolutely no scope for any complacency about the scale of the challenge we face, and we are determined to rise to it.

[Jo Swinson (East Dunbartonshire) (LD)]

Artificial intelligence brings huge economic opportunities, but to date big tech companies have seemed even more likely than traditional corporates to engage in aggressive tax avoidance and concentrate power in the hands of a narrow, homogenous group of people. What will the Treasury do to ensure that companies in this growing industry pay their own way fairly and take account of their wider corporate responsibility to society?

[Vicky Ford (Chelmsford) (Con)]

The services sector makes a huge tax contribution to the public purse. What confidence can the Chancellor give to my constituents who work in financial services that our new free trade agreement will cover services as well as goods?

[Mr Philip Hammond]

We are clear that a future comprehensive trade partnership with the European Union must include goods as well as services. A deal can only be done if it is fair to both sides, and because of the shape of the UK economy it would be very difficult to see how any deal could be fair if it did not include services. We have heard it asserted that it is impossible for services to be part of a trade agreement. I do not believe that that is the case. Next week, I shall make a speech in which I will set out our view of how it is possible to include services within such a trade deal.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The Chancellor referred earlier to what he called the “continued prosperity” in the UK. Will he undertake to ensure that a simplification of the tax system is undertaken by looking at the level at which low paid full-time and part-time employees get the first £300 a week free of national insurance and income tax, to try to raise prosperity among all sections of the community?

[Mr Hammond]

We will continue to seek to simplify the tax system, although I have to say that my personal observation is that whenever there is a proposal to simplify, those who benefit from complexities quickly speak up. They are not always people on high incomes; they are often people on lower incomes. We shall continue to try to simplify the system in a way that is fair and appropriate for all.

[Johnny Mercer (Plymouth, Moor View) (Con)]

While accepting that the Ministry of Defence is in need of serious reform as well as more money, will the Chancellor confirm that he has agreed with the Secretary of State for Defence that there will be no further reductions in capability while the modernising defence review takes place, and that the money required to do that, in the region of £2 billion, will be forthcoming?

[Mr Hammond]

As the House will know, I had the privilege to serve for nearly three years as Defence Secretary and I yield to no one in my admiration for the work of our armed forces. I also understand how complex and challenging managing the defence budget is: it is a multi-annual budget with many complex procurements. My right hon. Friend the Prime Minister and I are working very closely with our right hon. Friend the Defence Secretary as he carries out the modernisation review. We will ensure that defence has the funding it needs to continue to defend this country appropriately.

[Ruth George (High Peak) (Lab)]

North Derbyshire clinical commissioning group finished last year £27 million in the red, and £16 million of cuts were demanded. In spite of closing hospital beds at a time when they are most needed, it will again end this year £27 million in the red. When will the Government give the NHS a sustainable settlement to enable it to provide proper services?

[Bim Afolami (Hitchin and Harpenden) (Con)]

As the Chancellor knows, investment in infrastructure is key to ensuring that we can build the thousands of homes that this country needs. Will the Chancellor agree to meet me, other Hertfordshire MPs and the leader of Hertfordshire County Council to discuss how we might be able to do that in Hertfordshire, where we need to deliver about 100,000 new homes?

[Mr Philip Hammond]

Yes, I am always delighted to meet my hon. Friend and his colleagues. Hertfordshire is one of the high-pressure housing areas, where it is absolutely essential that we deliver additional housing if we are to improve affordability.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Cold weather payments were triggered in all postcodes in my constituency yesterday—information that I shared on social media—yet a constituent contacted me this morning to say that when she contacted the universal credit people, they said they knew nothing about it. Given the freezing weather and the fact that people will be nervous about turning on their heating if they do not know they can pay for it, will the Minister work with colleagues in the Department for Work and Pensions to resolve the situation as soon as possible?

[Mr Hammond]

I am grateful to the hon. Lady, and I will look into the point that she raised immediately. This is obviously an immediate issue in relation to the cold weather that we are having now. I will find out and let her know later.

[Several hon. Members rose—]