Finance (No. 3) Bill

Robert Jenrick Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[The Temporary Chairman (Sir George Howarth)]

With this it will be convenient to discuss the following:

Clauses 69 to 77 stand part.

Amendment 10, in clause 78, page 51, line 32, after “may”, insert—

“(subject to section (Review of expenditure implications of Part 3))”.

Antecedent to new clause 10.

Clause 78 stand part.

Amendment 14, in clause 89, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than the date provided for in subsection (1C), lay before the House of Commons a statement of the circumstances (in relation to the outcome of negotiations with the EU) that give rise to the exercise of the power.

(1B) The statement under subsection (1A) must be accompanied by—

(a) an assessment of the fiscal and economic effects of the exercise of those powers and the circumstances giving rise to them;

(b) a comparison of those fiscal and economic effects with the effects if—

(i) a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to, and

(ii) the United Kingdom had remained a member of the European Union;

(c) a statement by the Office for Budget Responsibility on the accuracy and comprehensiveness of the assessment under paragraph (a) and the comparison under paragraph (b).

(1C) The date provided for in this subsection is—

(a) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(1)(b) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(b) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(6)(a) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(c) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(8)(b)(i) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(d) the date on which this Act is passed,

whichever is the earliest.”

This amendment requires the first use of the powers intended to modify tax legislation in the event of a no deal Brexit to be accompanied by a statement of the circumstances and a comparative analysis of their impact, accompanied by an OBR assessment.

Amendment 15, page 66, line 30, at end insert—

“(1A) No regulations under this section may be made until the Chancellor of the Exchequer has laid a statement before the House of Commons setting out—

(a) a list of the powers in relevant tax legislation that the Treasury has acquired since June 2016 in connection with the United Kingdom’s withdrawal from the European Union,

(b) a list of the powers in relevant tax legislation the Treasury expects to acquire if—

(i) a withdrawal agreement and a framework for a future relationship with the European Union have been agreed to, or

(ii) the United Kingdom has left the European Union without a negotiated withdrawal agreement.

(c) a description of any powers conferred upon the House of Commons (whether by means of the approval or annulment of statutory instruments or otherwise) in connection with the exercise of the powers set out in subsection (b).”

Amendment 22, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than a week after the passing of this Act and before exercising the power in subsection (1), lay before the House of Commons a review of the following matters—

(a) the fiscal and economic effects of the exercise of those powers and of the outcome of negotiations for the United Kingdom’s withdrawal from the European Union giving rise to their exercise;

(b) a comparison of those fiscal and economic effects with the effects if a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to;

(c) any differences in the exercise of those powers in respect of—

(i) Great Britain, and

(ii) Northern Ireland;

(d) any differential effects in relation to the matters specified in paragraphs (a) and (b) in relation between—

(i) Great Britain, and

(ii) Northern Ireland.”

Amendment 7, page 67, line 1, leave out subsection (5) and insert—

“(5) No statutory instrument containing regulations under this section may be made unless a draft has been laid before and approved by a resolution of the House of Commons.”

This amendment would make clause 89 (Minor amendments in consequence of EU withdrawal) subject to affirmative procedure.

Amendment 20, page 67, line 2, at end insert—

“(5A) No regulations may be made under this section unless the United Kingdom has left the European Union without a negotiated withdrawal agreement.”

Amendment 2, page 67, line 13, at end insert—

“(7) This section shall, subject to subsection (8), cease to have effect at the end of the period of two years beginning with the day on which this Act is passed.

(8) The Treasury may by regulations provide that this section shall continue in force for an additional period of up to three years from the end of the period specified in subsection (7).

(9) No regulations may be made under subsection (8) unless a draft has been laid before and approved by a resolution of the House of Commons.”

Clause 89 stand part.

Amendment 8, in clause 90, page 67, line 16, after “may”, insert—

“(subject to subsections (1A) and (1B))”

This amendment is antecedent to Amendment 9.

Amendment 9, page 67, line 18, at end insert—

“(1A) Before proposing to incur expenditure under subsection (1), the Secretary of State must lay before the House of Commons—

(a) a statement of the circumstances (in relation to negotiations relating to the United Kingdom’s withdrawal from the European Union) that give rise to the need for such preparatory expenditure, and

(b) an estimate of the expenditure to be incurred.

(1B) No expenditure may be incurred under subsection (1) unless the House of Commons comes to a resolution that it has considered the statement and estimate under subsection (1A) and approves the proposed expenditure.”

This amendment would require a statement on circumstances (in relation to negotiations) giving rise to the need for, as well as an estimate of the cost of, preparatory expenditure to introduce a charging scheme for greenhouse gas allowances. The amendment would require a Commons resolution before expenditure could be incurred.

Clause 90 stand part.

New clause 10—Review of expenditure implications of Part 3—

“(1) The Chancellor of the Exchequer must review the expenditure implications of commencing Part 3of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) No regulations may be made by the Commissioners under section 78(1) unless the review under subsection (1) has been laid before the House of Commons.”

This new clause would require a review within 6 months of the expenditure implications of introducing a carbon emissions tax. It would prevent Part 3 coming into effect until such a review had been laid before the House of Commons.

New clause 11—Report on consultation on certain provisions of this Act (No. 2)—

“(1) No later than two months after the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a report on the consultation undertaken on the provisions in subsection (2).

(2) Those provisions are—

(a) sections 68 to 78,

(b) section 89, and

(c) section 90.

(3) A report under this section must specify in respect of each provision listed in subsection (2)—

(a) whether a version of the provision was published in draft,

(b) if so, whether changes were made as a result of consultation on the draft,

(c) if not, the reasons why the provision was not published in draft and any consultation which took place on the proposed provision in the absence of such a draft.”

This new clause would require a report on the consultation undertaken on certain provisions of this Act – alongside new clauses 9, 13 and 15.

New clause 17—Review of the carbon emissions tax (No. 2)—

“Within twelve months of the commencement of Part 3 of the Act, the Chancellor of the Exchequer must review the carbon emissions tax to determine—

(a) the effect of the carbon emissions tax on the United Kingdom’s carbon price in the context of non-participation in the European Union emissions trading scheme, and

(b) the effect of the carbon emissions tax on the United Kingdom’s ability to comply with its fourth and fifth carbon budgets.”

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

In these parts of the Bill, we make sensible preparations for our exit from the European Union. While right hon. and hon. Members across the House may well disagree on Brexit, I would hope that all would wish to see us prepare as carefully as possible so that we can maintain the stability of the tax system; provide as much certainty for the taxpayer as possible; in respect of carbon pricing, meet our commitments to the environment; and do all those things in all eventualities, including in the event of no deal, which is clearly not the Government’s preference but remains a possibility.

At Budget, the Government announced essential provisions to ensure that the tax system can continue to function in any outcome.

[Neil Gray (Airdrie and Shotts) (SNP)]

The Minister talks about preparations for no deal. In the OBR’s “Blue Book”, it quoted assessments made by economists who suggested that the economy had already shrunk by between 2% and 2.5% since the referendum, and the Library has suggested that that has cost the UK economy anywhere between £40 billion and £50 billion. Does he agree with that assessment, and what work has been going on in the Treasury to account for it?

--- Later in debate ---

[Robert Jenrick]

What I can tell the hon. Gentleman is that the economy has been growing for eight years—for five years, in every successive quarter. Unemployment is at its lowest rate in my lifetime and employment is at its highest. The British economy is sound and robust, and that is exactly why in the Budget the Chancellor was able to make the tax cuts for 32 million of our citizens and the increased spending on the NHS.

[Neil Gray]

rose—

[Robert Jenrick]

I will not give way again at this stage, but I could come back to the hon. Gentleman later.

The changes that we have outlined in these clauses will, I hope, signal that the UK is committed to maintaining stability and certainty for taxpayers and for businesses across the economy, especially in respect of the environmental tax provisions that I will talk about in a moment. Clauses 69 to 78 will allow the Government to introduce a carbon emissions tax to replace the EU emissions trading scheme—the ETS—in the event of no deal. Clause 90 will allow for essential preparatory expenditure to begin work on a domestic emissions trading scheme in the event that one is required. Clause 89 will introduce a power to make minor technical amendments to UK tax legislation—essential for maintaining the continued effect of the tax system.

Let me turn first to clauses 68 to 78 with respect to the carbon emissions tax. These clauses will take effect only if the UK leaves the European Union in 2019 without a deal. The clauses will give the Government the power to introduce a no-deal carbon emissions tax. The rate for 2019 would be set at £16 per tonne of carbon dioxide equivalent, and the tax would cover the same electricity generators and industrial businesses that currently participate in the EU ETS. The tax would provide the same protections against carbon leakage as the EU ETS. Operators would pay the tax only on emissions of carbon dioxide and other greenhouse gases emitted above an allowance set for each installation in advance of the tax year. This is in line with the EU ETS system of free emissions allowances.

In effect, the carbon emissions tax would seek initially to replicate the effects of the EU ETS as closely as possible, in the event of no agreement. This is important, as I hope hon. Members in all parts of the House will agree, for two reasons: first, because we want to provide certainty for businesses and for the energy industry to enable them to make investment and business decisions with confidence, as the industry has asked us to do; and secondly, because maintaining a carbon price is a key component of meeting our legally binding climate change commitments.

[Dr David Drew (Stroud) (Lab/Co-op)]

Does the Minister accept that now that the Government have greater freedom of operation, this is fairly timid? We have an emissions crisis in this country, as we do across the rest of the world. Why are the Government not being more ambitious in trying to bear down on emissions, as seen in the Intergovernmental Panel on Climate Change report?

[Robert Jenrick]

I appreciate the point the hon. Gentleman makes, but perhaps he has missed the argument I have tried to make, which is that this is not prejudging the later outcome of how we should handle our carbon pricing as we leave the EU; it is trying to ensure that in the unlikely event, which the Government wish to avoid, of a no-deal Brexit we can maintain the system as close as possible to the present one. We chose the price of £16 because that is broadly the same as where the EU’s floating price has been in recent months. Of course the price has floated very widely from as low as £6 to as high as over £20, so making that assessment is not a precise exercise, but we believe that £16 is a reasonable figure to maintain stability, and that seems to have been well received by the industry and environmental groups.

Clause 90 is about preparatory expenditure. Alongside preparing for no deal, the Government are developing long-term alternatives to the EU emissions trading scheme. As set out already in the outline political declaration on the future relationship between the EU and the UK, we are considering options for co-operation on carbon pricing, including, if possible, linking a UK national greenhouse gas emissions trading system with the EU ETS. Clause 90 will allow Departments to begin preparatory expenditure on a UK ETS, which is included in the Bill, to prepare for a linked or unlinked domestic trading scheme. It does not mean, as I said earlier, that a final decision has been made as to which option to implement, but it does ensure that all the options are kept open and we can proceed with the kind of planning that one would expect.

I shall now turn briefly to amendments 8, 9 and 10 and new clause 10 tabled by the SNP. Amendments 8 and 9 propose that the Government must table a statement on the circumstances that require expenditure in the case of clause 90 and an estimate of the expenditure to be incurred and that the House would come to a resolution to approve that expenditure. New clause 10 and amendment 10 would require the Chancellor to review the expenditure implications of the carbon emissions tax and lay a report of that review before the House within six months of the passing of the Bill, and no regulations could be made by the commissioners unless that had taken place.

A statement of circumstances, as required by amendments 8 and 9, is in our opinion unnecessary. We are legislating because the UK is leaving the EU, and as part of that we have to prepare a domestic ETS, as mentioned in the outline political declaration, and for a carbon emissions tax only in the event of no deal.

More importantly, with all these amendments, the Finance Bill is not and has never been the place for detailed questions of expenditure. The Finance Bill is primarily a Bill about tax. Parliament gets other opportunities to review and vote on departmental expenditure, and if that is important to the hon. Member for Aberdeen North (Kirsty Blackman), I suggest that she direct her scrutiny to the estimates process when it arises in due course.

New clause 17 would require the Chancellor to review the carbon emissions tax to determine its effect on the UK carbon price and the UK’s ability to comply with its fourth and fifth carbon budgets. We are confident that the carbon emissions tax would be similarly effective to the EU ETS, and I can assure Members that there are already robust requirements to report on progress towards the UK’s emissions reductions targets. For example, the Climate Change Act 2008 provides a world-leading governance framework that we certainly support. First, it ensures that the Government are required to prepare and lay before Parliament an annual statement of emissions, setting out the total amount of greenhouse gases emitted to, and removed from, the atmosphere across the UK and the steps taken to calculate the net UK carbon accounts. Secondly, the independent Committee on Climate Change is required to prepare and lay before Parliament an annual report on the Government’s progress towards meeting the UK’s carbon budgets, which the Government are required to respond to. Thirdly, the Government are required to prepare and lay before Parliament a statement setting out performance against each carbon budget period and the 2050 target. We believe that, taken together, these are strong existing mechanisms, which are respected and understood, to ensure that we monitor and report to Parliament on greenhouse gas emissions. I therefore urge hon. Members to reject new clause 17.

Let me turn to amendments 2, 7 and 21 to clause 89, which deals with minor amendments in consequence of our EU withdrawal. We need to ensure that the tax system continues to work effectively and that we maintain stability and certainty, including in the event that the UK leaves without a deal. To allow us to do that, clause 89 will allow minor technical amendments to be made to UK tax law to keep it working as it does now and to update it to continue to work with changes made to other areas of law on account of EU exit. Clause 89 will provide the Government with the power to make such minor amendments.

These are, I stress again, minor and technical changes that are absolutely necessary to maintain the continued effect of tax legislation in the unlikely event of no deal. I can reassure the Committee that the power is not being taken to make changes to do anything other than ensure that existing tax legislation continues to have effect in the event of no deal. It will not be used to change tax policy or the tax paid by taxpayers. To reassure the Committee of that, I have placed a list of changes that the Government intend to make under the power in the Library and sent a copy to the shadow Chief Secretary to the Treasury.

[Vicky Ford]

I thank the Minister for reaffirming that it is not the Government’s intention to leave with no deal. It is the intention to leave with a deal. On tax, there seemed to be some confusion over the weekend about the draft withdrawal agreement. Some people seemed to suggest that the UK would be bound into the EU tampon tax for a further five years. Can he confirm that under the withdrawal agreement, VAT on goods sold after the transition period will be subject to rates set by the British Government, not EU law?

[Robert Jenrick]

My hon. Friend, who is always well informed, is correct on both counts.

[Vicky Ford]

I thank my hon. Friend for confirming that from the Dispatch Box. Does he therefore agree that, before jumping to conclusions about what the draft withdrawal agreement says, colleagues should instead look at No. 10’s response to Steerpike’s 40 so-called horrors and at the true facts and answers from the lawyers who negotiated it before coming up with their own concerns?

[Robert Jenrick]

I would obviously advise all right hon. and hon. Members to read the withdrawal agreement, unlike the Leader of the Opposition, and not to rush to conclusions. The document produced by No. 10 to which my hon. Friend refers, which rebuts over 40 suggested flaws in the agreement, was very instructive, and I certainly found it helpful.

To finish on this point, I re-emphasise that I have laid before the House a comprehensive list of the changes that will need to be made to tax legislation. I advise right hon. and hon. Members who are interested to take a look at it. They will see that the changes are indeed minor and technical items that are not, I hope, controversial.

Amendments 14 and 22 would require the Government to publish an economic and fiscal analysis of the effects of our exit from the European Union before using the powers in clause 89. I can reassure the Committee that the Government have already confirmed that before we bring forward the vote on the final deal, we will ensure that Parliament is presented with the appropriate analysis in good time to make an informed decision. The Chancellor set that out in his letter of 23 August to the Chair of the Treasury Committee, a copy of which is in the public domain. He said that that analysis would look at the economic and fiscal effects of leaving the EU.

To provide Members with further detail today, I can confirm that that analysis will bring together evidence from across the Government, insight from external stakeholders and a range of data and analytical tools. The analysis will consider the long-term costs and benefits of moving to new trading relationships with the EU and the rest of the world. Having considered the amendment and spoken to several right hon. and hon. Members, I am happy to confirm that the baseline for this comparison will be the status quo—that is, today’s institutional arrangements with the EU. The analysis will consider a modelled no-deal scenario, or World Trade Organisation terms; a modelled analysis of an FTA scenario; and a modelled analysis of the Government’s proposed deal. Each will be compared against the status quo of the current institutional arrangements within the EU.

Amendment 14 would not require the analysis to be published until after the Bill receives Royal Assent. As a result, the Bill would not be binding on the Government until after the meaningful vote had taken place. I hope that the commitment that the Government have made today and the conversations that I have had with Members from across the House will provide reassurance that we will publish an appropriate analysis—the analysis that right hon. and hon. Members seek—in good time before the meaningful vote.

I turn briefly to the OBR’s role, which is mentioned in amendment 14. The House will know that the OBR’s remit is clearly defined in the Budget Responsibility and National Audit Act 2011, and that the amendment, which asks the OBR to assess our analysis of the effects of a deal, goes beyond its statutory responsibilities. That would set an undesirable precedent, with Parliament being able to commission specific pieces of work from the OBR on an ad hoc basis outside the clear and bounded remit set in the OBR’s charter. That would effectively transform the OBR into a parliamentary budget office, fundamentally changing its purpose and potentially damaging its credibility. Such a decision should be taken only after a full and frank debate on its own merits.

The House will be aware that the Treasury Committee, which is headed by my right hon. Friend the Member for Loughborough (Nicky Morgan), has appointed Sir Stephen Nickell, formerly of the OBR, to provide an independent view of the Government’s analysis. My officials have already had initial conversations with Sir Stephen about the scope and scale of his review, to ensure that we can provide him and his team with the necessary information in due course. I hope that that gives further reassurance to Members that scrutiny, of the nature that they seek, of the Government’s work will be undertaken by the Treasury Committee.

Furthermore, the OBR has already published a detailed review of the approach taken in the analysis provided across Whitehall, comparing it with other academic publications since the referendum. We believe that extending the OBR’s remit, as proposed by amendment 14, would require the OBR to analyse alternatives to Government policy. That would draw the OBR into political debate and expose it to a significant risk to its credibility and that of the UK’s fiscal framework. It remains highly unlikely that the OBR could, in the time available, go beyond the points it has already made in its discussion paper in any assessment of the Government’s analysis, bearing in mind its capacity and modelling today.

As for the effects of the power mentioned in amendment 20, I hope that my previous assurances will reassure right hon. and hon. Members that the Government intend to use the power not to introduce tax policy changes, but merely to secure the continued effective operation of the tax system. I hope that my right hon. and hon. Friends who sought this amendment will see that we have listened and engaged and that the reassurances that I have provided today achieve the amendment’s purpose. I therefore urge them not to proceed with their amendments.

I turn to amendment 15, which calls for the Government to provide a list of powers in relevant tax legislation that the Treasury has acquired since June 2016, or that it expects to acquire, relating to any EU exit scenario. All such powers have been passed as primary legislation. They have been scrutinised by this House and were voted through accordingly. As with all legislation, that which relates to these powers is in the public domain, should anyone wish to examine it. I do not think that it is necessary to reprise this list. I hope that hon. Members will see that amendment 15 is therefore entirely unnecessary, and I encourage them not to proceed with it.

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[Kirsty Blackman]

I rise to speak in favour of SNP amendments 7 to 10 and new clauses 10 and 11. I would also like to mention amendments 14, 15, 22, 20 and 2 and new clause 17, all of which we would be comfortable supporting, if any of them are pushed to the vote.

There has been a lengthy discussion across the Committee on trade deals. People are confusing free trade agreements and trade deals. It is perfectly possible to make arrangements that improve the flow of trade without signing an FTA; they are two very separate things. It is not understood widely enough that any trade agreement between countries involves compromise. Whatever is signed up to between, let’s say, the UK and the USA will involve the UK having to give some things away as well as gaining something.

The consultation on trade deals looked at trade deals with New Zealand and Australia, with the comprehensive and progressive agreement for trans-pacific partnership, and with the US. However, despite the fact that UK Government Members have talked about how important our trade is with countries such as South Korea and how fast it has grown, the Government have not consulted on that and they did not do so because we have those trade deals already, as a member of the EU. That is why our trade has grown so quickly with South Korea.

Thank you for your indulgence, Dame Rosie. I will move now to the actual subject of the debate. Our amendment 7 asks that clause 89 be subject to the affirmative resolution procedure. I appreciate that the Minister has put a list in the Library, and I will take a look at the list of tax changes he proposes to make under the clause, but I am on the Committee that is sifting the statutory instruments the Government are bringing forward, and some of those SIs that the Government think should be taken under the negative procedure should never have been so proposed. Some are fairly dramatic changes to the law—to powers or new institutions, for example—and yet are being put to the statutory instrument sifting Committee as negative instruments.

I hope that the Minister will forgive me, but I do not trust the Government to introduce only measures in the category that we believe should be subject to the negative procedure. I will look carefully at that list, but I will still press amendment 7, because, given my experience of Ministers, I do not yet have the level of comfort that I need.

[Robert Jenrick]

I hope that in due course the hon. Lady will have an opportunity to read the letter that is in the Library and see that these are truly minor technical amendments, changing, for example, a reference to the EU to a reference to the EU and the UK, and a reference to euros to a reference to pounds sterling. I hope that, in due course, she will be comfortable with those minor technical changes.

Finance (No. 3) Bill

Robert Jenrick Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I thank all right hon. and hon. Members across the House who have contributed to this wide-ranging debate. The shadow Chief Secretary to the Treasury managed the unusual feat of opening the debate without mentioning a single measure in the Finance Bill, although he did brandish a very thin pamphlet, which we were told contained all the answers to the Labour party’s spending commitments. A number of important issues have been raised across the House tonight, and I will do my best in the time available—and as swiftly as possible—to respond to as many as I can.

Two weeks ago, the Chancellor was able to present a Budget that followed five years of economic growth, with the deficit cut by four fifths, the lowest levels of unemployment, the highest levels of employment in my lifetime, real wages rising and real wages rising fastest among the lowest paid. It was a Budget in which, as a result of responsible management of the public finances—meeting the serious challenges we inherited in 2010 in a serious way—we were able to invest the highest levels in our economic infrastructure for more than 40 years, including £460 million more a week than the last Labour Government for our roads, railways and broadband. The Budget increased funding to the NHS by £20.5 billion a year in real terms; froze fuel, beer and spirits duty once again as a result of sustained lobbying and support from Members on the Government Benches, including my friends from Scotland; and—above all—provided a tax cut for 32 million people.

My hon. Friends the Members for Croydon South (Chris Philp) and for Cheltenham (Alex Chalk) and many other Government Members welcomed our action to support the high street and to enable town centres to adapt and evolve to new circumstances and continue to be the cornerstones of thriving communities. That action includes a reduction in business rates for 30% of smaller retailers, investment in transformation and infrastructure through the £675 million future high streets fund, and planning reforms to make it easier, cheaper and quicker to create businesses and work places in town centres and to create homes—planning reforms that are now, it seems, opposed by the Labour party.

My hon. Friend the Member for Croydon South made an interesting suggestion about the seed enterprise investment scheme. In the Budget, we reaffirmed our commitment to the world-class incentives we have as a country to encourage investment, promote wealth creation and make this country the best place in the world to be an entrepreneur, such as continuing entrepreneurs’ relief and continuing EIS and SEIS, as my hon. Friend suggested.

My hon. Friend the Member for Dover (Charlie Elphicke) and many other Government Members welcomed our sustained commitment to reducing corporation tax again—now to 17%—and noted that our decision to reduce it from 28% had not, as was suggested, reduced receipts to the Treasury, but had in fact increased them by 55%. My hon. Friend the Member for Gordon (Colin Clark) made the case, as he regularly does, that we want to grow the economy and support the people out there who are creating small businesses. This Budget and this Finance Bill are for them.

[Alan Brown]

I thank the Minister for giving way. If reducing corporation tax brings in more money, why has the Red Book never shown that, and why is the Treasury not able to provide any modelling that shows an increase in revenues from that reduction?

[Robert Jenrick]

I think I have already explained that the facts speak for themselves. Receipts from the reduction in corporation tax have increased by over 50%. That measure was opposed by the SNP and the Labour party.

My hon. Friend the Member for Solihull (Julian Knight) represents many people who work in the automotive sector, which we want to support. He asked about vehicle excise duty. In this Bill, as he knows, we are legislating to increase support for low-emission taxis and have brought that measure forward by a year. We have also increased support for electric charge points, to help the further roll-out of electric vehicles, as other hon. Members across the House have suggested. As I discussed last week with the chief executive of Jaguar Land Rover, who supported this strongly, we intend to review the consequences of the new worldwide harmonised light vehicle test procedure on vehicle excise duty and report back in the spring.

The right hon. Member for Twickenham (Sir Vince Cable) spoke of the need to incentivise further business investment, particularly at this important moment in the Brexit negotiations. I am sure he will welcome the increase in the annual investment allowance from £200,000 to £1 million, which will encourage businesses across the country, including manufacturers, to invest in new plant, new machinery and digital technology and raise their productivity, as well as the new structures and buildings allowance, which started on Budget day.

The Budget laid out a whole range of measures—exactly the ways forward that the right hon. Gentleman suggested—to increase productivity, which is the only sustainable way to improve living standards in this country, including the largest ever investment in our strategic road network and investment in our skills base, including the introduction of T-levels, encouraging apprenticeships and the national retraining partnership.

[Theresa Villiers (Chipping Barnet) (Con)]

I very much welcome the money in the Budget for repairing potholes. Does the Minister agree that it is vital that our great capital city gets its fair share of that funding?

[Robert Jenrick]

I certainly do. Some Opposition Members were snobby about potholes, but those of us in the real world know that potholes matter. They affect people’s working lives, and we want to fix that problem. In answer to my right hon. Friend, Barnet will shortly be receiving £690,0000 for potholes.

The hon. Member for Aberdeen North (Kirsty Blackman) and many others welcomed the transferable tax history, which we announced in the Budget and which she advocated. She was strongly supported by our Scottish Conservative colleagues. The oil and gas industry is a national economic asset and one that we want to support. It supports 280,000 jobs across the Union, but particularly in north-east Scotland. In the Budget, the Chancellor reaffirmed our commitment to strong, competitive and predictable taxation, so that the industry—which is, as the hon. Lady said, still fragile—can continue to strengthen in the years ahead.

Many of my hon. Friends, including my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), welcomed the introduction of the increase in the personal allowance and the increase in the higher-rate threshold—a tax cut for 32 million people, more than 1.5 million more working people taken out of tax altogether and achieving an increase in the personal allowance by more than 90% since 2010, which is a promise made in our manifesto and a promise delivered in the Budget.

My hon. Friend the Member for Walsall North (Eddie Hughes), as well as quoting Tiberius—I am yet to know whether Tiberius is quoted in No. 11; perhaps the Chancellor will invite my hon. Friend round for a cup of tea—was absolutely right to say that the Bill takes forward the measures in the last Budget to create a stamp duty relief for first-time buyers in other properties and extend it to those in shared ownership. That encourages and increases the dream of home ownership to a new generation.

As the Financial Secretary said at the beginning of the debate, the Bill also makes a number of changes to make our tax system fairer, and many Members across the House welcomed the new digital services tax. Some asked why we do not go further and faster, but let us remember that we will be the first major economy to create a tax of this nature. We are genuinely leading the international community and we hope to lead a multinational agreement, but the UK, under the leadership of the Chancellor, will lead the way. With those measures and others in the Bill, we will continue to close the tax gap, which is at its lowest ever and lower than in any year of the last Labour Government.

The hon. Member for Wakefield (Mary Creagh), at the beginning of the debate, and other hon. Members later, asked what action we are taking to support the environment and on climate change. One such measure, of course, is our proposed plastics packaging tax—again, leading the world by creating an innovative tax that encourages the producers of plastic packaging to take responsibility and change their packaging, and building on great Conservative environmental taxes of the past, such as the landfill tax created by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke).

My hon. Friends the Members for West Aberdeenshire and Kincardine (Andrew Bowie) and for Moray (Douglas Ross), among others, said very clearly—this is an important dividing line in British politics—that we are excited about the future of this country, and want to support and invest in science and technology and in research and development to drive the economy forward. From the Labour party, we heard no ideas as to how to grow the economy. We heard about more spending and higher taxes, but nothing about how to create wealth and make our country more prosperous. We heard only ideas that we know have failed in the past.

Let us be clear: a vote against the Bill tonight would be a vote against enabling investment and new jobs in the north-east of Scotland and a vote against the transferable tax history, which the hon. Member for Aberdeen North says she has campaigned for and advocated over many years. It would be a vote against further investment in manufacturing to raise productivity, which Opposition Members have said should be a national priority, and a vote against the increase in the annual investment allowance. It would be a vote against extending the stamp duty land tax relief for first-time buyers to those who want to live in shared-ownership properties, something advocated by my hon. Friend the Member for Walsall North. A year ago, the Opposition voted against our first policy in this area. Today, we know that more than 120,000 people across the country have benefited from that stamp duty relief. Surely the Labour party will not make the same mistake again.

Anyone who votes against the Finance Bill tonight will be voting against further actions to close the tax gap and to make it harder to evade and avoid taxation, and against making our tax system fairer. It would be a vote against a tax cut for 32 million people, and a vote against taking more than 1.5 million of our fellow citizens out of income tax altogether.

The Bill will make the UK more competitive, more innovative and more entrepreneurial. It will deliver lower taxes and put more money into the pockets of our British working public. It will make our economy and our country stronger, and I commend it to the House.

Question put, That the amendment be made.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 6th November 2018 Commons Chamber

[Lee Rowley (North East Derbyshire) (Con)]

5. What steps he is taking to increase productivity in the economy.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Budget set out the next steps in our plan to raise productivity and to grow the economy. That included increasing the national productivity investment fund to more than £37 billion to fund the largest sustained investment in our national infrastructure since the 1970s.

[Lee Rowley]

With that very increase in infrastructure funding to £37 billion, what opportunities are there in places such as North East Derbyshire to invest in regeneration and communities?

[Robert Jenrick]

The plans set out in the Budget were designed exactly for parts of the country such as my hon. Friend’s constituency. The £28.8 billion national roads fund will provide the largest ever investment in our strategic roads, and more money for potholes and pinch points. The future high streets fund will enable small towns across the country, including in the midlands, to be transformed and become thriving communities once more.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

How does the announcement in the Budget that non-NHS capital funding will actually fall in the coming years help the country’s productivity?

[Robert Jenrick]

The Budget announced the largest increase in capital spend in our economic infrastructure since the 1970s. Under this Government, investment in our economic infrastructure will be £460 million a week higher than under the last Labour Government.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

The Chancellor has announced that he will be improving productivity by stopping inefficient public sector contracting—basically, abolishing the use of the private finance initiative and private finance 2. Can more be done to reduce the £240 billion bill to our country left by the Labour party?

[Robert Jenrick]

Yes. We are ending the scandal of PFI that was created by the last Labour Government. Eighty-six per cent. of PFI contracts were signed by the last Labour Government—91% by value. In addition to retiring PFI we are creating a crack team, beginning in the Department of Health and Social Care, to look back at some of those old contracts and to clean out the stable left by the last Labour Government.

[John Cryer (Leyton and Wanstead) (Lab)]

This Government and their coalition predecessors have overseen the longest slump in wages in living memory. What effect has that had on productivity?

[Robert Jenrick]

The hon. Gentleman may not be aware of this, but real wages are rising. The Government believe that the best way to support working people across the country is to get them into work. Employment is now at its highest level in my lifetime, with 3 million more jobs created and 1 million fewer people on the dole.

[Neil O’Brien (Harborough) (Con)]

6. What plans he has to raise additional tax revenues from multinational digital businesses.

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[Steve Double (St Austell and Newquay) (Con)]

12. What steps he is taking to provide funding for infrastructure in the South West.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Plymouth and the West of England Combined Authority will benefit from the £2.5 billion transforming cities fund extended in the Budget. Cornwall will receive £79 million towards the A30 St Austell link road, which my hon. Friend campaigned for.

[Steve Double]

I thank the Minister for that answer, but Cornwall relies on its only mainline rail link through south Devon, and it is well documented that it is very vulnerable to adverse weather. The Budget Red Book contained a reference to improving that rail link, but some in the south-west have doubted the Government’s commitment to it. Can the Minister confirm that the Government are committed to improving that railway, and that we now need Network Rail to get on with it?

[Robert Jenrick]

Protecting the line at Dawlish is a national priority. South-west Conservative MPs, including my hon. Friend, pressed that upon the Chancellor and me, and we restated our commitment in the Budget to finding a permanent solution that delivers super-resilience at Dawlish.

[John Grogan (Keighley) (Lab)]

13. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on the proposed One Yorkshire devolution deal.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I have regular conversations with my counterparts in the Ministry of Housing, Communities and Local Government, including on the One Yorkshire proposals. We have said that we will respond to any proposals that we receive in good faith, assuming that they are able to provide for economic growth in a clearly defined economic geography.

[John Grogan]

Does the Minister agree that the detailed economic case for One Yorkshire devolution, presented to the Treasury and to other Ministries by no fewer than 18 Yorkshire councils, many of them Conservative, is worthy of detailed discussion between the Government and local authorities, as specified in the legislation?

[Robert Jenrick]

The hon. Gentleman and I have discussed this matter. I have met stakeholders from the region on a number of occasions, including Councillor Judith Blake from Leeds. We have said that to progress this matter we want to see the Sheffield city region become fully functioning and the Mayor, who is now elected, able to conduct his duties. We think that is a reasonable way forward, so that local people in that area are not let down.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

15. What recent assessment he has made of trends in the level of public funding for renewable energy since 2010.

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[Alex Norris (Nottingham North) (Lab/Co-op)]

T3. There were over 9,000 words in the Chancellor’s Budget speech, but not one mention of Nottingham or the east midlands. In the east midlands, we have multiple investable schemes that will drive growth in our region. When will the Treasury back the east midlands?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The hon. Gentleman obviously missed the Chancellor’s speech at the Conservative party conference, in which he announced the creation of a special area of economic activity at Toton, just south of Nottingham, which we expect to become one of the UK’s leading areas of economic growth. We also announced in the Budget an increase in the transforming cities fund, which will directly benefit Nottingham.

[Craig Tracey (North Warwickshire) (Con)]

T5. I welcome the announcement in last week’s Budget of investment in our high streets, which will be particularly welcome in Bedworth in my constituency. I had meetings with local businesses recently on this very issue, and particularly on their frustrations at the lack of ambition of the local borough council. Can the Minister advise how local councils such as Nuneaton and Bedworth can best take advantage of this excellent opportunity?

--- Later in debate ---

[Alex Chalk (Cheltenham) (Con)]

Motorists want to see the earliest possible end to the traffic misery on the A417 caused by the air balloon pinch point. Does my hon. Friend recognise that the Budget, through its extra firepower for roads, provides the best possible platform for such a vital scheme?

[Robert Jenrick]

I have met my hon. Friend and his Gloucestershire colleagues to discuss this matter. It was with strategic roads and roundabouts, such as the air balloon roundabout, in mind that we made the largest ever investment in our strategic road network. Decisions on specific roads will be made next year.

[Neil Gray (Airdrie and Shotts) (SNP)]

I welcome HMRC’s rather belated decision to return tax wrongly paid by the Roadchef employee benefit trust. It is clearly now necessary to honour previously made commitments in respect of tax implications for beneficiaries. Did HMRC use its discretion to make that payout, and, if so, on what basis?

--- Later in debate ---

[Julian Knight (Solihull) (Con)]

Thank you, Mr Speaker.

This morning, the European Automobile Manufacturers Association released research demonstrating that all 270 new-generation diesel vehicles tested to date are below the emissions threshold on the road. In the light of this, will the Treasury team meet me and other colleagues to discuss how we can construct a road tax system that promotes clean diesel over old diesel and protects 9,000 jobs in my constituency?

[Robert Jenrick]

I would be very happy to meet my hon. Friend, who I know is a champion for Jaguar Land Rover. I hope it will reassure him to know that I will discuss these issues with the chief executive of that company later today.

[Chris Bryant (Rhondda) (Lab)]

If we took every single person who has suffered a major traumatic brain injury—for instance, from a car crash—from needing four people in order to be able to wash, clothe and look after themselves to needing just one, and thereby leading a more independent life, we could save the taxpayers £5 billion a year. May I meet with the Chancellor to explain all this?

Freeports

Robert Jenrick Excerpts

Thursday 11th October 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is a pleasure to respond to the debate. Like my hon. Friend the Member for North East Derbyshire (Lee Rowley), I represent one of the most landlocked constituencies in the country, although the River Trent is still tidal when it reaches Newark, so perhaps there is potential for a freeport in Newark one day.

I thank my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) and the right hon. Member for Birkenhead (Frank Field), who sadly could not be with us, for raising an important issue. This issue interests me a great deal. I engaged with it before I became a Minister, when I was involved in a proposal for a freeport around East Midlands airport, and in my business career before being elected to Parliament, when I visited and engaged with freeports in Geneva and Shanghai. I have seen both the advantages and the disadvantages of some of the freeports around the world.

I support the goals that underpin many of the arguments we have heard: increasing global trade at a pivotal moment for our country’s future; increasing economic development in all parts of the United Kingdom and inward investment in those parts that have seen less of it in recent years; supporting manufacturing and particularly advanced manufacturing that takes advantage of the new technologies that are transforming the way we produce products—we want to ensure the UK is at the heart of those new processes; and seeking new free market approaches to growing our economy. Those are a good thing in themselves and send positive signals about our country, our openness and our willingness to create a business-friendly environment for investment. We have had a positive debate along all those lines.

I reassure Members that the Treasury has engaged actively with stakeholders on this topic. We have already heard that my right hon. Friend the Chief Secretary to the Treasury visited my hon. Friend the Member for Cleethorpes (Martin Vickers) in Immingham. She and I also visited the Tees Valley Mayor in the constituency of the hon. Member for Redcar (Anna Turley) to hear the proposals there, and we later met my hon. Friend the Member for Middlesbrough South and East Cleveland.

I held a roundtable at the Treasury earlier this year with the ports sector and the Minister with responsibility for ports. I listened to people’s ideas and enthusiasm about freeports and invited them to gather their thoughts and come back to us with substantive proposals, and I committed to giving those proposals the consideration they deserve. I remain keen to receive such proposals and to see what we might be able to achieve together.

Let me begin along the same lines as my hon. Friend the Member for Middlesbrough South and East Cleveland. There seem to be two principal advantages to a freeport—the first on the customs side, and the second around the regulatory changes and supply-side reforms that could flow alongside that. Let me dwell for a moment on the customs aspect, which is perhaps the most important from the Treasury’s perspective and in the current debates about Brexit.

As we heard, it is already possible for a private operator to apply to become a free zone. We have ensured that that will still be possible after we leave the European Union, under any scenario. The hon. Member for Redcar asked whether, under the current legislation, she would be able to apply for one with respect to Teesside and the South Tees Development Corporation. Yes, that is possible under the law as it is today, and as it will be in any scenario after we leave the European Union, but she or other stakeholders would need to come to us with substantive proposals. That is how people would expect the Treasury to behave when making important long-term decisions about the tax system—they would not expect us simply to act on a whim.

The Treasury will continue to have the power to designate free zones under the Customs and Excise Management Act 1979 and the Taxation (Cross-border Trade) Act 2018, which I appreciate everyone is familiar with and which will enable HMRC to set requirements for goods within free zones. Whether to apply for designation as a free zone will continue to be a commercial decision for the private operators of a port—in discussion with HMRC and the Treasury, clearly—and we are open to applications.

I want to be very clear as we discuss the customs benefits that most, if not all, of the customs benefits of a free zone are available today. We heard about the two most significant facilitations that we as a country provide for business in this respect—customs warehousing and inward processing relief. Those allow imported goods to be stored and to undergo value-adding processes, with duty being paid only when the goods are released into free circulation, or never if they are re-exported elsewhere in the world. I will explain that in more detail in a moment.

Those benefits are not limited to particular locations, so they do not provide the region-specific targeted boost that certain hon. Members present would like. However, they are available to any business anywhere in the country, which is an important freedom in itself. More than 8,500 companies across the United Kingdom benefit from customs facilitations every year and are able to pass those benefits down through their supply chain, potentially to smaller businesses. Those benefits will continue regardless of the outcome of our negotiations with the EU and our exit from the EU next year.

Let me use Liverpool as an example—I hope the right hon. Member for Birkenhead reads the report of the debate when he emerges in the coming days. Liverpool was one of the five areas of the UK with a free zone under the EU scheme, which we heard about from my hon. Friend the Member for Middlesbrough South and East Cleveland. As we heard, those zones were not redesignated in 2012, partly due to concerns about customs assurance around the type of free zone. Much though many of us would like to support free zones, it must be said that there was very little negative reaction to that. We understand that many of the companies that operated in those free zones now benefit in almost exactly the same way as they did before from customs facilitations the UK already offers. We have not received substantive proposals to revisit that.

Let me return to the example of Liverpool. Today, a manufacturer in Liverpool is able to gain all the benefits of a free zone without being constrained to locating within the free zone site. Setting aside large sites such as the south Tees site, some sites, including the one in Liverpool, are quite constrained and do not have the ability to become vast sites such as the one in Dubai we heard about.

If there was a ship manufacturer, for instance, in Liverpool or Birkenhead, materials for its vessels could be imported and stored in a customs warehouse somewhere in the Liverpool area, or anywhere else in the country, without duties being paid on them. The manufacturer or its supply chain could then use those materials in the manufacturing process under inward processing relief, and the finished ships could be exported without any UK customs duty ever having to be paid. That avoids the distortions and perverse geographical outcomes that would undoubtedly arise with free zones, where a manufacturer or its supply chain would feel the need to locate on the same site, although I appreciate that would be beneficial to those locations, some of which require urgent inward investment.

The UK’s current customs facilitations offer broadly the same benefits that attract businesses to free zones in other developed countries, such as the United States. For example, two thirds of goods imported to US foreign trade zones are brought in to enjoy the same tariff-free manufacturing benefits offered by inward processing relief. The other third are stored in those zones, gaining the same cash-flow benefits offered by customs warehousing. From a customs perspective, the UK model compares favourably with the model in the United States—arguably more so because it does not force or encourage a company to locate in a particular place, but gives it the freedom to operate and trade wherever it wishes throughout the United Kingdom.

However, as Members would expect, we want to ensure we have an even more business-friendly environment, particularly as we leave the European Union. I am sure there are ways we can improve those customs arrangements, and we are actively engaged in identifying how we might do that now or post Brexit. We are open to suggestions from hon. Members, such as my hon. Friend the Member for Middlesbrough South and East Cleveland, who is very engaged with this issue. We are also actively engaged with people in some communities, including the Tees Valley Mayor and the hon. Member for Redcar, about how we might make those arrangements place-specific. That certainly could be taken forward.

As my hon. Friend said, if one agrees that the customs benefits are more limited because we have a fairly favourable customs arrangement—I have already described that—the wider question is how we can improve supply-side reforms and the business-friendly environment in the whole country or in particular places. In that regard, I draw Members’ attention to a couple of things on which we are focusing heavily.

Like many of those who have contributed to the debate, I want to see supply-side reforms to boost growth and support business. With the Chancellor and Chief Secretary, I have been highly engaged in efforts to increase productivity and regional growth in that way.

As the hon. Member for Redcar said, we should exercise caution because we do not want to propose ideas, whether in a freeport or another setting, that would lower environmental standards or indeed workers’ rights. We have been clear that we see leaving the European Union as an opportunity to not only protect those rights but enhance them. No proposals should be at the expense of the environment, workers’ rights or other things in our regulatory framework that we are proud of as a country and want to see continued or enhanced.

We are, however, highly engaged in how we can increase economic growth in particular places, either because they require it more than others, having received less investment in recent years, or because there is a significant national economic opportunity for growth that requires Government support. In that regard, we have made a number of interventions that build on a long history, to which my hon. Friend the Member for Middlesbrough South and East Cleveland referred, going back to the 1980s and the Thatcher revolution. They include locally led or mayoral development corporations—that power is available to the Mayor of Tees Valley. They also include enterprise zones, which the Government have expanded since 2010, creating many more in different combinations, including those linked to universities, which provide particular opportunities to help universities orientate themselves towards the local and regional economy, commercialise research and development, and help start-ups to scale up and achieve their potential. In some cases, those approaches have had the benefits that my hon. Friend described. Again, we are open to further conversations on how we might deliver them.

Development corporations empower places to overcome local barriers to growth and have provided a sharper commercial focus to large-scale Government investments to help develop local areas. In the Tees Valley, the first mayoral development corporation outside of London has been set up by the excellent local Mayor, Ben Houchen, whom I met only yesterday to discuss his future proposals.

At the Conservative party conference, we announced funding to boost growth and development in the east midlands between Nottingham and Leicester, creating a new locally led delivery model—potentially a development corporation—around Toton. Again, that is an area of significant economic potential, and we want to use the levers available to us in central Government, working closely with local leadership and the business community, to take that forward at pace. The funding will support the area to move on with those announced proposals.

We are supporting local businesses particularly through enterprise zones—since 2012, we have established a further 48 of them—in all regions of the United Kingdom, including most of those represented here today, and certainly in the Tees Valley. In those zones, businesses benefit from tax and regulatory incentives. We have piloted other models, including, at the Budget last year, an east midlands-focused manufacturing zone to provide a more business-friendly environment for manufacturing businesses.

We are open to further conversations in that regard. We want to see more locally led models and development corporations and, as my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) said, more Canary Wharf-style opportunities to transform local areas and drive the economy forward at pace, with a particular focus on planning, where there is growing consensus for further liberalisation. There may be great opportunities to do so in these places if there is strong support from the local community, Mayors and the locally elected democratic leadership of councils.

As I told the ports when I met them earlier in the year, and as was said in the conversations the Chief Secretary has had with others, we believe there may be opportunities for some levers to be pulled with respect to ports. If they wish to take advantage of opportunities for locally led development corporations or those with a central Government component, we are happy to discuss that and see that moved forward as fast as possible.

We want to see further business-friendly customs arrangements put in place. Proposals for freeports would need to prove that they will genuinely attract inward investment into the United Kingdom and not simply displace growth that might have happened in other parts of the country. It must be an additive policy that makes the country more prosperous and does not simply move jobs and investment from other parts of the United Kingdom.

We are aware of the risks of free zones we see around the world relating to money laundering and other illicit activities—I saw that when I visited freeports, particularly with respect to the art market, which I worked in before being elected. We take note of the G7’s Financial Action Task Force. There are important questions that need to be explored and understood, and we must be sure that we overcome those risks before going further.

I thank my hon. Friend the Member for Middlesbrough South and East Cleveland for raising an important issue. Personally, I am highly engaged in it, along with the Chief Secretary. We want to see substantive proposals brought forward for us to consider, which can inform the debate and answer some of the questions that I and other Members have raised. How would free zones genuinely be additive and drive forward the prosperity of the whole United Kingdom? How can we overcome some of the disadvantages in terms of criminality and illicit trade that we have seen around the world? From a customs perspective, how would a freeport add something to our business-friendly customs environment that we do not have already, bearing in mind the analysis and comments I have laid out? How can that play a part in our wider strategy to use devices such as development corporations or enterprise zones to help areas seize economic opportunities, liberalise planning, build a business-friendly vision and attract business leadership to take forward their communities and economies?

This is an interesting and exciting opportunity worthy of further thought and consideration. I look forward to working with colleagues on both sides of the Chamber on it in the future.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 11th September 2018 Commons Chamber

[Ben Bradley (Mansfield) (Con)]

5. What steps he is taking to invest in infrastructure in the east midlands.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Over the course of this Parliament, long-term investment in our infrastructure will reach levels not sustained since the 1970s. In the east midlands, for example, we are investing from the national productivity investment fund to reduce congestion. We are investing £125 million this year on local road maintenance, and we announced this summer £780 million for a series of works to upgrade the east coast main line.

[Ben Bradley]

As my near neighbour in Nottinghamshire, the Minister will be aware of the Robin Hood line that runs through my constituency from Nottingham. Proposals to extend the line across Warsop in the north of my constituency have now appeared in various Budgets. The Transport Secretary has ensured that the new franchisee will have to consider the business case for that extension. Can the Minister confirm that the Treasury will support it financially if that business case comes forward?

[Robert Jenrick]

My hon. Friend and my hon. Friend the Member for Sherwood (Mark Spencer) have been campaigning on this for several years, and we recognise its potential to unlock economic opportunities in Mansfield and Ollerton. Within the east midlands franchise, we have included a requirement that the operator should come to the Secretary of State for Transport within a year with a business case for extending passenger services to my hon. Friend’s communities. The Department for Transport and the Treasury will consider that business case very carefully.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

Does the Minister accept that crucial investment from the European Investment Bank and the European regional development fund recently underpinned the midlands engine investment fund and that a hard Brexit risks pulling the rug from underneath many critical investment projects? He knows in his heart that a “cake and eat it” Brexit is a pure delusion and that his European Research Group colleagues still cannot explain how it would work. Would it not be better if we just let the public sort this out and have a say with a people’s vote?

[Robert Jenrick]

The public have already had a say, and in the east midlands, which we are discussing, the public were very clear that they want to leave the European Union. Infrastructure investment will be substantially higher over the course of this Parliament than it was under the last Labour Government—25% higher in the east midlands and 40% higher in Yorkshire and the Humber. The primary reason for that is this Government’s responsible management of the public finances.

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

Will my hon. Friend take the time to point out where some of this infrastructure spend is going? At the moment, Derby station is being remodelled—£200 million —and the M1 is being upgraded to a smart motorway. This is massive investment for the long-term future of the east midlands.

[Robert Jenrick]

My right hon. Friend is absolutely right. Of course he was the Secretary of State for Transport who led many of these important investments. In the east midlands, we are investing in the smart motorway, in the upgrade to the east coast main line, in Derby bus station and in new green buses in Nottingham. The list continues, and only because of this Government’s management of the public finances, which is keeping the economy growing.

[Helen Goodman (Bishop Auckland) (Lab)]

rose—

--- Later in debate ---

[Mr Gary Streeter (South West Devon) (Con)]

6. If he will provide additional resources to the Department for Digital, Culture, Media and Sport to support the Mayflower 400-year anniversary celebrations.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

We recognise that the Mayflower commemorations are an important moment for this country to celebrate our tied history with the United States and the unending quest for religious freedom and toleration. The Government gave £0.5 million to the Mayflower 400 project in the 2015 spending review, and we will continue to support it in the years to come.

[Mr Streeter]

Given the significance of the voyage of the Mayflower—in historical terms, it was one of the planet’s most influential journeys and it helped to found our democracy and freedom—will the Minister respond positively to the letter he has received from the all-party parliamentary group on the Mayflower pilgrims requesting that we have sufficient resources to celebrate this amazing event in a spectacular fashion?

[Robert Jenrick]

At the suggestion of my hon. Friend and of my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), I met Charles Hackett, the chief executive of the Mayflower 400 project. We had a productive meeting, and we are considering the materials that the project left with us. I advise my hon. Friend the Member for South West Devon (Mr Streeter) and the organisers of Mayflower 400 to continue working with the Department for Digital, Culture, Media and Sport and the Treasury as they continue to formulate their plans, which will benefit not just Plymouth but Boston, Bassetlaw and communities across the country.

[Mr Speaker]

For the edification of those observing our proceedings, I can advise that the hon. Member for Huddersfield (Mr Sheerman) has just been chuntering at me that his grandmother had a link with the Mayflower, about which I think we are to be enlightened.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Some Members may think that I was on the Mayflower, although as a young man I did emigrate to the United States. Some of my ancestors, the Sheermans, could have been on the Mayflower—[Interruption.] Just hold it for a moment. This is the 400-year anniversary. Is it not time that we celebrated migration and the talent, the genius, the innovation and the ideas that we in this country and America get from migration? Should we not use this quadricentenary to celebrate migration across the world?

[Robert Jenrick]

The hon. Gentleman is testing my knowledge of the pilgrim fathers, but of course they were inspired by William Bradford, who came from Yorkshire, I believe. He was the one who said that from small things great things can emerge, and that it takes just one small candle to light a thousand, which was the way that the whole pilgrim fathers’ enterprise was summed up. So I want to see the commemorations take place in Yorkshire, as well as in Plymouth and the rest of the country.

[Martin Vickers (Cleethorpes) (Con)]

I urge the Minister not to forget Immingham in my constituency, which also played a major part in where the pilgrim fathers sailed from. Will he ensure that Immingham is a major player in any celebrations?

[Robert Jenrick]

I have tried to list all the places where the pilgrim fathers came from. I was not aware that some came from Immingham as well, but I am sure that that will be included in the celebrations.

[Helen Goodman (Bishop Auckland) (Lab)]

Discussion of DDCMS support for the Mayflower celebrations raises the problem that DDCMS regional funding is deeply unfair, with far more in London. Indeed, that is the pattern on infrastructure, which the Minister was talking about before. So to what extent does the Minister believe that unfair patterns of Government spending are the cause of the fact that household income in the north-east is only £15,000 per year, whereas in London it is £27,000?

[Robert Jenrick]

As the hon. Lady will be aware, the Arts Council has a formula to distribute funding across the country. We believe, like she does, that it is important that all communities in this country can have access to culture and heritage. It is for that reason and others that we funded the Great Exhibition of the North, which has been a huge success; and of course the Chancellor, in his Budget two years ago, supported the huge economic and cultural opportunity of restoring Wentworth Woodhouse, near to the hon. Lady’s constituency.

[Vicky Foxcroft (Lewisham, Deptford) (Lab)]

8. Whether he has made an assessment of the adequacy of his Department's cross-departmental guidance on the contracting out of public services as a result of recent disturbances in prisons.

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[Vicky Ford (Chelmsford) (Con)]

This summer, we saw the devastation of the collapse of an elevated roadway in Italy. In Chelmsford, the main route into the city is over the Army and Navy flyover, which is now 40 years old. I am not suggesting that it is on the brink of an Italian disaster, but it will need replacing. What funds might be available to assist?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

My hon. Friend and I met earlier in the summer to discuss the flyover, and she raised concerns then. I appreciate that it has been closed, owing to safety concerns, over the summer. Funding is available through Essex County Council, and of course through her local enterprise partnership, which has received almost £600 million over the spending period.

[Tonia Antoniazzi (Gower) (Lab)]

T6. The Chancellor will be aware of Macmillan Cancer Support’s long campaign to introduce a duty of care on financial services providers to ensure that vulnerable customers get the support they need to stop financial problems escalating. The Financial Conduct Authority has now published a discussion paper on the introduction of a duty of care. Will the Chancellor commit to meeting Macmillan to discuss the consultation after it closes on 2 November?

--- Later in debate ---

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

The Chancellor has been an outspoken advocate of a fairer distribution of regional spending. Has he read the letter that we sent him in late July? Will he commit to the Transport for the North strategic investment priorities in his forthcoming Budget?

[Robert Jenrick]

I know that my right hon. Friend the Chancellor has my hon. Friend’s letter. Over this Parliament, we will spend more central Government funding per capita on transport in the north than in, for example, London or the south-east. We will consider carefully the business case for Northern Powerhouse Rail when we receive it from Transport for the North later in the year.

[Laura Smith (Crewe and Nantwich) (Lab)]

This is further to the points raised by my hon. Friends the Members for Ilford North (Wes Streeting) and for Weaver Vale (Mike Amesbury). In the light of the National Audit Office’s recent comments that there are signs that police forces are struggling to deliver effective services and that the Government do not know whether the police system is financially sustainable, what real reassurance can the Chancellor give me that police forces will be given a real increase in funding, so that they can cope with growing demand?

National Insurance Contributions

Robert Jenrick Excerpts

Thursday 6th September 2018 Written Statements

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Government are announcing today that they will not proceed with the abolition of class 2 national insurance contributions (NICs) during this Parliament.

This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue, and further options for addressing any unintended consequences.

A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the state pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this Parliament, given the negative impacts it could have on some of the lowest earning in our society.

Furthermore, it has become clear that, to the extent that the Government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy.

The Government remain committed to simplifying the tax system for the self-employed, and will keep this issue under review in the context of the wider tax system and the sustainability of the public finances.

The Government still intend to legislate for reforms to the NICs treatment of termination payments and income from sporting testimonials, which were set out in the draft NICs Bill published on 5 December 2016. These are important changes to ensure the NICs treatment is consistent with the treatment of income tax in previous Finance Acts. We will set out further details in due course.

[HCWS944]

Office for Budget Responsibility

Robert Jenrick Excerpts

Tuesday 24th July 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is a pleasure to serve under your chairmanship, Mr Gray, and I thank my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) for securing the debate. There are few issues on which I would like to end the parliamentary term more than the remit of the Office for Budget Responsibility. As we have heard from Members on both sides of the House, there is widespread agreement that the credibility of our fiscal framework matters and that the quality of our national debate on economics is extremely important—not just to the economy and the country, but to the sustainability of our democracy.

The Government are proud to have established the Office for Budget Responsibility in 2010. On behalf of the Treasury, I thank—as my hon. Friend did—its staff, its first chairman, Sir Alan Budd, and of course Robert Chote, who has taken the organisation forward since. Were he listening to the debate, as I am sure he is, he would take heart from the fact that hon. Members on both sides of the House have praised the organisation that he leads and agreed that it has managed, in a relatively short time, to establish itself as a credible and independent organisation. I hope that that continues in the years ahead under his leadership and that of whoever succeeds him.

We created the OBR in the context of the fiscal disaster that was the last Labour Government, as part of our mission to restore credibility to the public finances. Since 2010, we have gone a long way to turn things around, reducing the deficit by three quarters and reaching the point where our debt will begin to fall this year, but I do not begin to claim that we have reached the end of the story.

There is a great deal more to do, and, as we heard eloquently from my hon. Friend the Member for North East Derbyshire (Lee Rowley), we are still paying, as a country, £50 billion a year in interest payments. That fact alone demonstrates the importance of the OBR and of improving the quality of economic debate in this country. As my hon. Friend rightly pointed out, all democracies in the west have suffered in recent years from politicians over-promising at election times and at other moments. We need to ensure that we have fiscal credibility as a country to sustain our democracy.

We created the OBR specifically as an independent institution responsible for examining the sustainability of the public finances and ensuring that the UK maintain its credibility—something that was clearly in doubt back in 2010.

[Anneliese Dodds]

May I briefly ask whether the British economy was growing when Labour left office?

[Robert Jenrick]

The British economy had just suffered a severe recession, and we inherited the largest peacetime deficit since the end of the second world war. Nothing exemplifies the situation with the public finances more than the note that was left on the desk in the Treasury office down the road saying that there was no money left.

The OBR produces the official economic and fiscal forecasts for the UK. It does not cost Government policies, but scrutinises and certifies costings initially prepared by the Treasury and other Departments to estimate their impact. That is an important point, to which I will return in a few moments. The OBR also provides detailed public reports, including the fiscal risk report every two years, which we have heard about, and the fiscal sustainability report, which was published last week and which keeps us at the frontier of fiscal management internationally and demonstrates our commitment to fiscal transparency and accountability. I am pleased that, as we heard in the debate, Scotland has followed suit and, since 2014, the role of the Scottish Fiscal Commission has been strengthening. That institution is in its relative infancy, but it appears to be building credibility and working to help keep Scottish finances in check.

The OBR has won international acclaim. Earlier this year, Kevin Page, in a paper for the Centre for Economic Policy Research, said:

“The OBR’s commitment to transparency is likely the gold standard in the IFI community.”

He added:

“The OBR deserves to be considered a leader among”

independent fiscal institutions

“for the transparency of its work and the credibility it derives”,

as we have heard from hon. Members. Protecting that credibility should be as much a priority for Parliament as it is for Government.

Since 2010, there have been a number of calls to expand the OBR’s remit, including proposals, as we have heard today, to report on distributional analysis, performance against child poverty targets, environmental matters and living standards. Each has merits, and deserves discussion and further thought. The OBR was deliberately set up to report on the sustainability of the public finances, and to date that is where we have let the matter settle. Asking the OBR to expand into areas beyond its core expertise and experience carries with it risks to its credibility. We need to consider that carefully before taking any such steps.

The OBR has also been called on to produce costings of policy proposals for Opposition parties. Again, we have heard about that today, and it has been raised by successive shadow Chancellors, including Ed Balls before the 2015 general election. Respected institutions such as the Institute for Fiscal Studies already perform that function well, and we should bear that in mind as we consider such proposals. As we heard from my hon. Friend the Member for Ochil and South Perthshire, the IFS recently exposed the folly of some of Labour’s proposed tax increases.

[Anneliese Dodds]

indicated dissent.

--- Later in debate ---

[Robert Jenrick]

The hon. Lady shakes her head, but the IFS said that those would lead to taxes being raised to their highest in peacetime history. The IFS also questioned whether they would raise as much as the shadow Chancellor claimed, and said that they would hit working families hardest. We do not always need to rely on the OBR to twist the knife, as the IFS has certainly done so repeatedly.

[Anneliese Dodds]

May I respectfully ask how exactly the IFS was able to analyse the Conservative party’s policies, when there was no indication in its manifesto of how any of them would be funded? It appears slightly peculiar to pick on the small number of criticisms made by the IFS of some elements of Labour’s assumptions when no information whatever was provided by the Minister’s party.

[Robert Jenrick]

I would not characterise the IFS’s criticisms of the Labour party’s manifesto as “small”. They were pretty fundamental; the remarks I have just described speak for themselves. The IFS did analyse the policies of the Conservative party in the lead-up to the last manifesto, but let us stick to the question before us today, and apologies to you, Mr Gray, for deviating from it.

A number of arguments have been made today for widening the remit of the OBR. Over previous years, such arguments have been looked at in some detail. Back in 2014, Robert Chote wrote in response to Andrew Tyrie, now Lord Tyrie, who at the time was Chair of the Treasury Committee, setting out his views on the matter. He said that, while some of those arguments undoubtedly had merit and deserved proper consideration by the Government and by Parliament, it was important that we consider

“the significant practical issues that would need to be addressed”.

Let me briefly set out some of those, which we would all need to consider.

My hon. Friend the Member for Ochil and South Perthshire referred to the US Congressional Budget Office. That is a good comparison, although the US system varies from our ours in a number of ways—in particular, Congressmen, Congresswomen and Senators have a much greater ability than Members of the House to initiate legislation that carries with it significant financial implications. However, it is worth considering the remit of the CBO, and its capacity.

The CBO undertakes analytical work in-house and has around 235 members of staff, with an annual budget of around $50 million. In comparison, the Office for Budget Responsibility has just 27 members of staff and costs us around £2.5 million. The OBR is clearly dwarfed in comparison. Although that is not in itself a reason not to proceed, we would have to consider the financial consequences of doing so.

The CBO is required by law to produce cost estimates for nearly every Bill approved by a full budget committee of either the House or the Senate, and produced 740 such formal costings last year, so a significant amount of work would be required. It is worth pointing out that the CBO does not—this is perhaps a more relevant comparison for some of the issues we have discussed this morning—evaluate the costings of candidates for Congress, or indeed of presidential candidates. Clearly, to increase the remit of the OBR would require it to have a significantly larger operation.

Undertaking Opposition costings as part of the parliamentary process would have important implications for the OBR and departmental resources in all Departments, including the Treasury, but the greatest impact would be felt were it to be involved in manifesto costings. The time that the OBR and Departments needed to produce costings would pose very particular difficulties during general elections, some of which are unplanned. It is difficult to see how parties could be afforded the customary flexibility in developing their manifestos until a relatively late stage in the election process, to reflect the public debate in the run-up to the election. Instead, they might have to submit detailed proposals two or three months ahead of a general election. Of course, we could consider that, but we would have to consider carefully the implications for the general election process and the way we have traditionally approached that.

The policies in scope for OBR costings also differ in type from the policies that have dominated the political debate. The detailed costing process at fiscal events covers only tax and welfare policies, which are clearly very important and a significant element of general elections, but are not all the issues reflected in a general election or all the policies in manifestos.

The other point to note is that the OBR does not produce the work in-house. It relies on detailed data produced for it by Departments, including the Treasury, which are then submitted to the OBR for scrutiny and analysis. As the hon. Member for Aberdeen North (Kirsty Blackman) said, the quality of the information is extremely important. Civil servants in Departments would be required to work through political parties’ manifestos and then provide high-quality approved data to the OBR, with which it could do its usual costings.

[Kirsty Blackman]

I do not think that the problems the Minister raises are insurmountable; they could be overcome. A concern that I perhaps should have mentioned in my speech is how the OBR decides which policies it will look at, and which it will not. It could be accused of bias if it looked only at Labour party policies, for example, and not very many Conservative party polices. If the OBR were to be expanded, I would like to see a public consultation on what its expanded remit should be and which policies it should therefore look at.

[Robert Jenrick]

Were the OBR to see its remit extended, that would be a matter for Parliament. It would be debated extensively within Parliament.

To finish my point on civil servants, there is an important matter of principle here. Civil servants would have to undertake detailed costings and provide data on Opposition policies—we should all acknowledge that that would represent a significant constitutional development for the UK. We would have to be willing to do that in the knowledge of its consequences.

To answer other points raised in the debate, the OBR does, to some extent, look at the effectiveness of policies. For example, it re-costs policies at each fiscal event, and it looks again at tax policies that arose in previous fiscal events at each subsequent Budget. It does not evaluate the individual effectiveness of the policy, but evaluates only its fiscal consequences, although the National Audit Office and the Public Accounts Committee, as well as Select Committees, have the ability to do that—and do so, very well.

The hon. Member for Oxford East (Anneliese Dodds) raised a point about the OBR’s remit with regard to the environment. The Government are interested in how we can ensure that the Treasury takes account of climate change and other important factors. One example of our action is commissioning Professor Dieter Helm to carry out an important review for us and to take forward the idea, still in its infancy, of how we as a country could create natural capital accounts. We are very keen to work that through in the coming years.

This has been a helpful debate. It is important for Parliament to review the OBR at this moment. We have conducted two internal reviews in the Treasury, both of which concluded that the remit is sufficient. We do not intend to change it at present, but it has been helpful to hear views from a number of Members and we will of course give careful consideration to those views in the future.

Infrastructure (Financial Assistance) Act 2012: Annual Report

Robert Jenrick Excerpts

Thursday 19th July 2018 Written Statements

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The annual report to Parliament under the Infrastructure (Financial Assistance) Act 2012 for the period 1 April 2017 to 31 March 2018 has today been laid before Parliament.

The report is prepared in line with the requirements set out in the Infrastructure (Financial Assistance) Act 2012 that the Government report annually to Parliament on the financial assistance given under the Act.

Copies are available in the Vote Office and the Printed Paper Office.

[HCWS895]

Air Passenger Duty

Robert Jenrick Excerpts

Tuesday 10th July 2018 Westminster Hall

[Drew Hendry]

The hon. Lady makes the point well. This is an exemption based on population density and the regional difficulties in the highlands and islands. Indeed, it should be possible—I hope it is—for the Scottish and UK Governments to work together to solve that problem.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

We are.

[Anneliese Dodds]

I was pleased to hear the Minister say from a sedentary position that they are working on that. I hope the UK Government will do so with rather more application than they did on support for the steel sector, of which I had an inside view as a Member of the European Parliament: they made no attempt to secure clearance for the kind of support we saw applied in countries such as Romania, which had been okayed by the European Commission; they asked the Competition Commissioner for exemption only from environmental measures. There was not much application around steel, so I hope we will see a different approach to these matters.

Another concern is the impact of APD on Britons who have family living outside the British Isles. The previous four-banding system meant that such individuals could end up paying more APD than those travelling to the US, for example. None the less, the division in the calculation between short and long-haul travel continues to be criticised by some who feel that that disadvantages Brits with families in, for example, the Caribbean, India, Pakistan or Bangladesh, who need to fly long haul to visit them. One could argue that other, lower carbon alternatives are available to flying for short-haul journeys, which do not apply for travelling long distances. An indication of the Government’s thinking on that would be helpful.

Our final concern is about APD’s impact, or otherwise, on environmental outcomes. In response to a question posed by the hon. Member for Henley, the hon. Member for Belfast East maintained that APD does not have a positive environmental impact. However, we must look at it in the context of enormous public concern around climate change and the increasing significance of emissions from aviation. At APD’s introduction in 1994 and, following that, the Labour Government’s focus on it, there was an attempt to ensure that its design would have a green impact. For example, during the 2007 Budget process it was stated that APD

“plays a valuable role in ensuring that passengers understand and acknowledge the environmental costs of their actions. The resultant behaviour change can deliver significant climate change benefits”.

Those believed benefits were then detailed.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I congratulate the hon. Member for Belfast East (Gavin Robinson) on securing this debate. I have known him since he and I were elected and have always been fond of him, but I was not expecting a belated Valentine’s day present. I vaguely remember that some time ago the hon. Members for Strangford (Jim Shannon) and for East Londonderry (Mr Campbell) presented a giant heart-shaped card to No. 11. I wonder whether the Chancellor’s predecessor regrets not taking the advice on it. Flattery will get you everywhere at the Treasury, so I am grateful for that.

We have had a productive debate and it has been interesting to hear from all sides. There is significant agreement across the House that we view the UK aviation sector as extremely important to our quality of life and for creating jobs, and particularly for connectivity within our United Kingdom and beyond. There is no more important time for us to consider both how we can bring the United Kingdom closer together, and how we can make ourselves more open to the outside world. This is therefore a timely debate. Let me say a few words about APD and aviation in general, and then I will turn to Northern Ireland and try to answer, assuming time allows, many of the reasonable and important points raised. If I cannot do so, I will write to the relevant Members.

The UK aviation sector is a strong performer and we are a world leader in that industry. We have the third largest aviation network in the world, and since 2010 passenger numbers at UK airports have grown by more than 20%. That strength extends across the entire UK, not just at major airports such as Heathrow. Regional airports are growing and handled approximately 113 million passengers last year. There is good news across the sector.

Regional airports have been the basis of this debate. They make a valuable contribution to the growth of local economies and support connectivity across the UK. We appreciate that and want it to continue. We must also appreciate that aviation plays its part—like all industries—in contributing to the Exchequer. We heard various epithets about looking after pennies and not being penny-wiser and pound-poorer, and we appreciate that. The Treasury wants to ensure that we meet our commitments to public services and to continue to address the deficit and the debt.

We also want to pursue policies that will increase economic growth, in which tax has a role. As the hon. Member for Oxford East (Anneliese Dodds) said, in line with our international treaty commitments, we do not tax commercial aviation fuel and no VAT is charged on airline tickets. It is important that that part of the economy plays its part in funding public services, which was why the Government introduced air passenger duty in 1994. Without that duty, commercial aviation would be relatively undertaxed compared with other industries.

Air passenger duty raises around £3.2 billion a year, which is a significant amount of money. It would be foolish of the Treasury not to take that seriously and to proceed without great caution. That is why we are proceeding with the introduction of a call for evidence, which I will discuss in a moment. We appreciate the arguments that were made eloquently by the hon. Member for Belfast East—those points were also made by Democratic Unionist Members who spoke after him and by many other Members across the House, including those from the north-east, the west country, Wales and Scotland. We are alive to those concerns and I hope I can provide further detail about the steps that we are taking.

We are conscious that APD is often passed on to passengers as part of their ticket fares. This is not a tax on passengers—it is a tax on airlines—but in many cases it feeds through to the cost of tickets. In recent years we have tried to minimise the impact of APD on hard-working families to ensure that those who can afford to pay more do so. Last year we announced that rates will stay frozen for the sixth year in a row for the 80% of passengers who fly short-haul. That will help to keep down the cost of holidays for the vast majority of travellers, including those who travel throughout the United Kingdom for business or other reasons. We have exempted children from APD, which could save a family of four £26 on a short-haul flight and £156 on long-haul flights. Together those actions reduced the burden of APD by about £300 million pounds in the last financial year alone.

We have increased APD on private jets to ensure that those with the deepest pockets pay their fair share, and we are using those proceeds to fund some of the savings for families and holiday travel. I hope Members agree that, alongside those reforms, the Government have demonstrated their strong commitment to the aviation sector more generally, which was exemplified most recently by decisive action to address capacity constraints in the south-east. The new Heathrow expansion will provide capacity for an additional 260,000 flights a year and deliver an extra 16 million long-haul seats for passengers travelling from UK airports by 2040. I hope and believe that it will also be beneficial for all regional airports in the UK, including those in Northern Ireland and Scotland. We heard the Secretary of State’s important commitments on Heathrow and want them delivered. Additional capacity at Heathrow is expected to bring a boost of up to £74 billion to passengers and the wider economy over the next 60 years and we want that delivered at pace.

The Government are not blind to calls from the industry and over the years, including during my relatively brief time as a Minister, we have met a number of airports stakeholders. As a result of discussions with the DUP, we decided to create a call for evidence—I have received and read the representation from the right hon. Member for Belfast North (Nigel Dodds) on behalf of his party. The Financial Secretary to the Treasury has already visited Northern Ireland to meet stakeholders, including representatives from the airports, so that we can take seriously and listen directly to concerns about APD and VAT.

We are concerned to proceed with care in these matters, first because of the significant amounts of revenue for the Exchequer that are at stake, but also because, as we have heard during this nuanced debate, there are currently complexities regarding EU state aid guidelines. That situation may continue depending on the ultimate agreement that we reach with the European Union—in a moment I will come on to the position in Scotland, where those complexities have come out most vividly in recent months and years.

We keep the matter under review. The call for evidence has now closed. The Chancellor, Treasury officials and I will carefully consider the arguments submitted by many stakeholders in Northern Ireland. We expect to offer a response in the Budget in October or November. I hope we can continue conversations once we have carefully analysed the evidence submitted.

Clearly the tourism industry is important in Northern Ireland, as it is in all parts of the United Kingdom, and we appreciate that the Northern Ireland economy is still in recovery mode and that it requires our wholehearted support to continue to grow. Tourism in Northern Ireland has been growing significantly in recent years, as there is so much to offer there. We appreciate the unique position of Northern Ireland in the United Kingdom with respect to economic competitiveness. It is the only part of the Union that shares a land border with another state—the Republic—which poses a number of challenges, one of which relates to airports. Anyone who visits Northern Ireland and understands its economy will appreciate the impact on passenger numbers, business and other passenger choices of the fact that there are other airports within easy driving distance. We shall consider those points carefully in the coming months.

We have read the various reports hon. Members have quoted. We do not necessarily agree with all their findings, but the purpose of the call for evidence that has just closed is to build our own significant evidence base, to enable us to arrive at our own view. It may not be exactly the same view as the independent reports, but we intend to take a detailed, careful decision.

I will deal briefly with other points made in the debate. EU state aid rules, which are relevant to Scotland, have proved complex. As I said from a sedentary position—the hon. Member for Oxford East picked it up—we are working productively with the Scottish Government, which I should like to continue. I would be happy to discuss after the debate or on another occasion how we can step up those efforts. The Government passed the legislation recommended by the Smith commission in 2014 that devolved APD to Scotland. Implementation has been delayed, as the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) described, because it has proved difficult to square the circle as to how the measure would apply to the highlands and islands. I am sure the hon. Gentleman wishes for a settlement to be reached. We shall continue to work closely together and when it is eventually implemented we will bear in mind how it works in other parts of the United Kingdom, including for the airports closest to the Scottish border.

As the hon. Member for Oxford East mentioned, we have in the past looked into the impact of air passenger duty on regional airports in England. There was at that time no consensus about how to proceed. We analysed the various recommendations carefully. There were no easy answers and different airports came up with different and often competing proposals, but we remain open to further suggestions and are in constant conversation, as Members might expect, with airports, stakeholders and Members of Parliament who want to take the matter forward.

As was mentioned in the debate, we have had a discussion with the Welsh Government about the devolution of air passenger duty to Wales. Careful consideration led to the conclusion, which was respected by many if not all the stakeholders, that Cardiff airport was essentially within the same air economy as Bristol airport, and that it was necessary to proceed very carefully before changing the regime for Cardiff in view of the knock-on effect on Bristol. However, we shall continue to think carefully about whether there is a way around that situation. We should not want to harm Bristol inadvertently by creating a competitive advantage for Cardiff.

There are already powers for devolved Governments to take action on route development funds. I appreciate the current difficulties in Northern Ireland in taking that forward, but were the Executive there to resume, they would have the capacity to proceed and implement a route development fund for Northern Ireland. The Government in Wales also have powers to take action because they own Cardiff airport. They could act to develop it further from its current relatively small number of passengers—it is about 1.5 million a year, whereas there are 8 million at Bristol, its nearest competitor.

There is still no easy definition of long and short-haul flights. We have alighted on a definition of a short-haul flight as one where the capital—not necessarily the relevant airport—of the destination country is within 2,000 miles of the UK airport. The effect of that is to take in all European Union countries, plus most Mediterranean-facing countries, with one or two exceptions that are arguably anomalies, such as Israel and Egypt. The vast majority of countries bordering the Mediterranean fall within the definition, and it seems broadly logical. There is no perfect definition.

On the environmental points made, we are interested in treaty obligations. Perhaps there is an opportunity to take action on a multilateral basis. I do not think that that is being pursued today, but I am happy to look into the matter and revert to the hon. Member for Oxford East. As I said, we have taken action against private jets, which are less environmentally friendly and may at times be under-occupied. It has proved complex and difficult to take action on under-occupied flights. HMRC has done significant work on that and no simple solution has been found. Today the duty is paid by airlines, not passengers, so there would need to be significant change to the tax to implement that.

I hope I have answered some of the questions that hon. Members raised. If there are further points, I am happy to discuss them afterwards. I want to leave the hon. Member for Belfast East with my and the Chancellor’s reassurance that, in the months ahead, we will work carefully through the submissions in response to the call for evidence. We will listen to the arguments of the hon. Gentleman and his colleagues, which appear to have significant support from other parts of the House, and before the Budget we shall present our careful response. In the meantime I shall be happy to discuss the issue further should he or his colleagues want that.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 3rd July 2018 Commons Chamber

[Robert Courts (Witney) (Con)]

6. What steps he is taking to invest in infrastructure in (a) Witney and (b) Oxfordshire.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Under this Government, investment in infrastructure will reach the highest sustained levels since the 1970s. In respect of Oxfordshire, the Department for Transport and Chiltern Railways have jointly funded a £400 million western section, delivering a new service between Oxford and London Marylebone, and we are of course backing the new Expressway and the east-west railway linking Oxford to Cambridge.

[Robert Courts]

I am grateful for the Minister’s answer, but congestion on the A40 and reliability problems on the Cotswold line make travel a daily challenge for residents of west Oxfordshire. We urgently need upgrades on that line and extra capacity on the road network, particularly the A40. What can Ministers offer through central Government funding to give hope to my constituents?

[Robert Jenrick]

I appreciate that my hon. Friend has been campaigning for such things since before his election. We have provided £35 million for the Oxford Science Transit scheme, which will enhance the A40 between Oxford and Witney. As for the A40 more generally, the Government are providing £150 million through the Oxfordshire housing deal, which he could tap into to see further improvements on that road.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

rose—

--- Later in debate ---

[Steve Double (St Austell and Newquay) (Con)]

11. What steps he is taking to invest in infrastructure in Cornwall and the south-west.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Government are investing in the infrastructure of the south-west. We are investing £2 billion in the strategic road network, including to transform the A303/A30/A358 into an expressway. We are delivering £146 million of investment in Cornish rail and, thanks to my hon. Friend’s efforts, we are investing £79 million in the A30 to St Austell link road.

[Steve Double]

Cornish wages continue to lag around 30% below the national average. The national productivity investment fund is designed specifically to increase wages and living standards; will my hon. Friend tell the House how much of that fund is being spent in Cornwall and the south-west?

[Robert Jenrick]

We are investing significant funds, including £92 million to tackle congestion in the south-west and a portion of a £200 million fund for full fibre, and we are providing £40 million for small and medium-sized enterprises through the British Business Bank, which will go to Cornish small businesses.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

rose—

--- Later in debate ---

[Matt Western (Warwick and Leamington) (Lab)]

14. What assessment his Department has made of the effect on economic growth of levels of (a) car sales and (b) investment in the car industry.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The automotive sector is an extremely valuable part of the UK economy and we have worked very closely with it in recent years. We have established the first automotive sector deal, and we have backed research and development projects, such as the advanced propulsion centre, with £300 million of investment. Through the future of mobility grand challenge and a succession of Budget measures, we are supporting the development of and transition to low emission and autonomous vehicles.

[Matt Western]

The Chancellor will be well aware of the importance of car sales and manufacturer investment as indicators of economic output and business confidence respectively. In the year to May, car sales were down 7% and truck sales were down 6%. Investment by vehicle manufacturers fell by 55% in 2017 versus 2015, and by 47% in 2018 versus 2017 for the first quarter of the year, so it is on track to be down 75% from three years ago. Does the Chancellor accept that these figures are the reality behind the Foreign Secretary’s assertion—I think this was the phrase—“fudge business”?

[Robert Jenrick]

As I have just described, the automotive sector is extremely important, and few of its businesses are more important than Jaguar Land Rover, which I appreciate is close to the hon. Gentleman’s constituency. Car sales in 2017 were actually 25% higher than in 2010 and the UK remains the second biggest car market in Europe after Germany, so there is a great deal to celebrate in the UK automotive sector, and we will continue to support it.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

20. In the light of Brexit, just this morning the British Chambers of Commerce published a list of two dozen vital questions to which British business needs answers, 10 of which are specifically relevant to the car industry. What assessment has the Chancellor made of the potential loss of business investment in the UK car industry as a result of the Government’s failure to provide answers to those questions?

[Robert Jenrick]

We are working closely with the automotive sector, and the Treasury and other Departments have met its representatives on a number of occasions. The Prime Minister has made it clear that our intention throughout the current negotiations is to ensure that EU-UK trade is as frictionless as possible. We will continue to work with the automotive sector to ensure that we deliver a good Brexit deal for it.

--- Later in debate ---

[Bob Stewart (Beckenham) (Con)]

T9. Fly-tipping is now a major nuisance to my constituents. The cost of dealing with even a single instance can run to thousands of pounds, and that does not include the cost of investigating for hazardous waste and trying to get prosecutions. Will the Minister consider the case for additional funding to enable my local council of Bromley, as well as other councils, to pay for the battle against environmental criminals?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Fly-tipping and illegal waste sites are a blight in many parts of the country. The Chancellor announced additional funding in the Budget for enforcement activities. The Environment Secretary recently announced a review of waste crime, and we will follow the results of that closely.

[Stephen Lloyd (Eastbourne) (LD)]

T3. As the Ministers on the Treasury Bench know, there are strongly held and differing views about the fairness of the implementation of the Treasury’s 2019 loan charge. Recent media reports have identified the severe impact that this huge retrospective charge is having on the mental health of some contractors, and I have real concerns for their wellbeing. Will the Minister commit to setting up a 24-hour helpline to provide support for individuals caught in this trap?

--- Later in debate ---

[Robert Jenrick]

I am not familiar with the project that the hon. Lady mentions, but I will look into it immediately and write to her.

[Mr Speaker]

The hon. Member for Harrow West (Gareth Thomas) was inadvertently erased, but I will come to him momentarily—he need not fear.

--- Later in debate ---

[Gareth Johnson (Dartford) (Con)]

Dartford has seen over 1,000 new homes built in and around the town during the past 12 months, which is more than anywhere in Kent and one of the highest figures in the country. Does the Minister agree that investment in infrastructure needs to complement those new homes, not wait for several years?

[Robert Jenrick]

My hon. Friend is absolutely right. That is why we have created the £4 billion housing infrastructure fund—it is exactly to deal with this problem—and a £600 billion pipeline of new infrastructure projects. He and I have already met to discuss the issues in his constituency, and we will be taking that forward.

[Clive Efford (Eltham) (Lab)]

Is it possible to provide the funding that our NHS needs and at the same time keep to the reckless tax cuts that the Government announced in their manifesto last year?