Topical Questions

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 5 June 2008.

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Photo of Adam Holloway Adam Holloway Conservative, Gravesham 10:30, 5 June 2008

If he will make a statement on his departmental responsibilities.

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

The core purpose of the Treasury remains to ensure the stability of the economy and to promote growth, as well to manage the public services and finances.

Photo of Adam Holloway Adam Holloway Conservative, Gravesham

From next year, Her Majesty's Revenue and Customs will be able to show up at someone's office or workplace, at their accountants or their bank and demand information about them. Can the Chancellor outline what benefits there will be from those massively increased powers?

Photo of Jane Kennedy Jane Kennedy Financial Secretary, HM Treasury

HMRC has been undertaking a review of its powers because it was widely recognised that there were very strong powers in some areas of the tax code and much more limited powers in other areas where there was unevenness and inequity in the way in which they were exercised. We will scrutinise the powers that we propose to reform, including, I assume, in the debate that we will have later today in the Finance Bill Committee upstairs. There will be a reining back of some of those powers and a greater transparency about how they are applied. I hope that the hon. Gentleman will be reassured if I tell him that there will be many more safeguards for taxpayers—rights of appeal and so on—in the way that the powers are applied. I am listening closely to representations that are being made by taxation advisers and others in the field as we take this review forward.

Photo of Nia Griffith Nia Griffith PPS (Mr Phil Woolas, Minister of State), Department for Environment, Food and Rural Affairs

Many of my constituents are worried about the rising cost of food in their shopping baskets, but even more concerned about the major rise in food prices worldwide and the potentially devastating effects on many people in poorer countries. Will my right hon. Friend the Chancellor tell me what action he is taking to tackle this crisis in rising global food prices?

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

We will raise that issue at the G7 meeting in Japan in 10 days' time. It is important that countries throughout the world act to deal with some of the problems that are causing high food prices. For example, we in Europe need to face up to the impact that the common agricultural policy is having on food prices or the very high import tariffs that we impose in some cases. We also need to look at whether the current biofuels policy is distorting the market. It cannot be right that corn that could be used for food purposes is used to be put into petrol tanks. Sustainable biofuels can be used, and we need to make sure that we use them, but we also have to ensure that import and export barriers that countries have are broken down, which is why it is important that we get a trade deal as quickly as possible. We need to look at the barriers that are preventing farmers, either here or in developing countries, from planting the crops that we need. That is a huge problem for developed and developing countries alike, and it demands international action. We want to make sure that it is properly discussed and that action follows from the meeting in 10 days' time.

Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury

Does the Chancellor agree with us and the Treasury Committee that the person appointed to the post of deputy governor of the Bank of England should be someone with direct financial markets experience?

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

We will make an announcement shortly, but I say to the hon. Gentleman that I hope that we get all-party agreement on the matter. Part of the changes that I want to make to the Bank of England is to restructure it so that one of its core purposes is the maintenance of financial stability. We should learn from the example of the Monetary Policy Committee, and take a similar approach to financial stability, bringing in outside expertise to advise the Governor and the appropriate deputy governor.

I agree with the hon. Gentleman that it is crucial that the Bank of England, which does not have such a responsibility at the moment, has a statutory responsibility to ensure that the viability of the financial system is at the front of everything that it does. It is important that we get that reform through; it is also important that we appoint the right person to be the deputy governor. I will ensure that that happens.

Photo of Andrew MacKinlay Andrew MacKinlay Labour, Thurrock

When the Home Office and the Foreign Office contemplate granting political asylum to these extraordinarily clever people who come to this country from the former Soviet Union not with millions, but with billions, what involvement does the Chancellor's Department, or departments for which he has responsibility, have in commenting on the veracity, honesty and integrity of people who have, frankly, ripped off their countries and rushed to the west?

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

I am not aware of being routinely asked for advice on such matters. Of course, the Treasury, if asked by either the Home Office or Foreign Office for its comments, would be happy to give them.

Photo of Tony Baldry Tony Baldry Conservative, Banbury

Is the Treasury going to find the money to ensure that our armed forces are paid and housed decently, or are the Government simply going to ignore today's advice from Sir Richard Dannatt?

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

As the hon. Gentleman will know, we have increased spending on defence over the last few years, which contrasts with what happened in the 1980s and 1990s. In the settlement made with the Ministry of Defence last year, we have also made additional funds available for the refurbishment of Army homes. I agree with the hon. Gentleman: it is important that we provide decent homes for people who are serving their country so well.

I understand that the Chief of General Staff raised the issue of pay in an interview in one of this morning's newspapers. We implemented the independent pay review recommendations last year, and some soldiers in the junior ranks got an increase in their pay way above inflation. We will continue to do whatever we can to support the armed forces that serve this country so well, but I can tell the hon. Gentleman and the House that we have been increasing the amount going to the MOD for some time now.

Photo of Shona McIsaac Shona McIsaac Labour, Cleethorpes

People on low incomes are worried sick about being able to pay their gas and electricity bills. The energy companies, which rake in huge profits, have introduced social tariffs, but I am worried that few people know about them, so they do not get the limited help available. What discussions will be held with energy companies and others to ensure that people get all the help that is there for them?


Lets not forget that the government is also getting a big wind fall in increased Vat on these larger Bills.

Submitted by ross warren

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

I agree with my hon. Friend that people face increased pressure because of increased gas and electricity bills. That is why we reached an agreement with the power companies earlier this year. Among other things, it will ensure that people do not pay so much on the pre-payment meters. It always seemed wrong to me to ask people on low incomes to pay more than those on high incomes. It was unnecessary and should be sorted out, as it will be. As part of that, we have agreed to ensure that people get proper advice to try to get them on the lowest appropriate tariff as well as, of course, proper advice on and provision of, for example, insulation, to cut down on the amount of energy that people need to use in the first place. We are doing a range of things, but I agree with my hon. Friend that we must ensure that people know what they are entitled to so that they can get the benefit of it.

Photo of Jo Swinson Jo Swinson Liberal Democrat, East Dunbartonshire

With the soaring cost of fuel, the current 40p tax-free mileage allowance does not cover the cost of running a car for many key workers in our economy, including small business owners and community nurses. Will the Chancellor review the rate?

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

We always keep those rates under review. The hon. Lady should also remember that the mileage rates are not meant to compensate for all the costs of running a car.

Photo of Stephen Hepburn Stephen Hepburn Labour, Jarrow

May I draw Ministers' attention to the Public Accounts Committee report, which stated that relocating 10,000 Government jobs from London to the north-east would mean a saving of £78 million a year? What progress has been made on the Lyons proposals, which the Government fully endorsed and which advocated the transfer of 20,000 jobs?

Photo of Jane Kennedy Jane Kennedy Financial Secretary, HM Treasury

I am grateful to my hon. Friend for giving me notice of the question. Since 2004, we have succeeded in relocating 15,700 staff out of London and the south-east. We are determined to maintain the momentum and I am confident that further posts will move to the north and north-east. Indeed, I understand that, in the past few days, Her Majesty's Revenue and Customs has confirmed a further 95 jobs in the Washington cluster of offices. I hope that my hon. Friend is reassured that we are maintaining the pressure and the momentum.

Photo of Simon Hughes Simon Hughes Shadow Leader of the House of Commons, Party Chair, Liberal Democrats

Is it still Government policy to reduce the gap between the richest 10 per cent. and the poorest 10 per cent. in this country? If so, when will that be delivered?

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

If the hon. Gentleman cares to examine what we have done in the past 10 or 11 years, he will realise that we have hugely increased people's incomes, especially those of people on lower incomes. I strongly believe that it is right to ensure that there is a fair tax system and that people are rewarded for their work. It will always remain a central purpose—a part of what we are about—to ensure that people on lower and middle incomes see the reward for what they have done and to continue to do everything that we can to take children and pensioners out of poverty.

Photo of George Mudie George Mudie Labour, Leeds East

Following the Bank of England's indifferent performance on Northern Rock, may I strongly endorse the earlier suggestion that the Chancellor stay firm in support of appointing a more City and market-oriented individual to the deputy governor's post instead of the cosy but wrong alternative of an in-house promotion?

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

I do not think that I can add much to what I said to the shadow Chief Secretary. I will make a decision in the not-too-distant future, but it is important that we keep sight of the fact that, although the appointee is important, it is also important to make the necessary changes to strengthen the Bank of England's ability—and responsibility—to deal with the stability of the financial system as a whole.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

If an ordinary family in my constituency who drive, say, a Ford Mondeo face a 30 per cent. rise in their car tax over the next three years and the consequent damage to its resale value, can the Chancellor explain by what mechanism that improves the environment?


This is an easy one..The plan is to tax poor people off the roads and therefore reduce the impact on the environment.

Submitted by ross warren

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Many Ford Mondeos will see a freeze or a fall in their vehicle excise duty. Perhaps the hon. Gentleman should recognise that some people will gain from the changes.

Photo of Siôn Simon Siôn Simon Labour, Birmingham, Erdington

Will the Chancellor consider liberalising the regulation of non-standard forms of consumer credit? In the current climate, it is impossible for low-income families to secure mainstream consumer credit. We do not want them to go to loan sharks or dodgy credit providers, but the current regulatory framework makes it difficult for non-standard providers to offer consumer credit to families.

Photo of Kitty Ussher Kitty Ussher Economic Secretary, HM Treasury

I am grateful to my hon. Friend for that question. He will have heard in earlier exchanges this morning about the important role that institutions such as credit unions can provide in, I hope, one day crowding out the legal but extortionate credit providers. Obviously loan sharks operate in the illegal sphere. My colleagues in the Department for Business, Enterprise and Regulatory Reform have already made significant progress in tightening up the regulations in that area. If there are other issues that my hon. Friend feels that we should look into, I should be happy to discuss them with him personally.

Photo of Patrick Cormack Patrick Cormack Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee

Will the Chancellor now come to the Dispatch Box and acknowledge the disproportionate impact that the increase in vehicle excise duty will have in rural areas?

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Again, it depends on the cars being driven. There is no obvious reason why there should be a disproportionate impact in rural areas, as opposed to urban areas. The idea behind the changes is to encourage people to move to cleaner, less polluting cars. The Conservative "Quality of Life" report proposed putting the idea into effect in a much more draconian way than we are suggesting, yet now the Conservatives vote against it and do not support it.

Photo of John McFall John McFall Chair, Treasury Committee, Chair, Treasury Committee

The Chancellor will know that Rachel Lomax, the deputy governor of the Bank of England who is retiring, has done an excellent job in charge of monetary policy. I urge the Chancellor not to box himself in, but to take the recommendations of the Treasury Committee and consider a management reorganisation at the deputy governor level, so that we can elevate financial stability to the important position that it should have?

Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer

I have tried over the past 20 minutes precisely not to box myself in, for obvious reasons. I do not normally discuss individuals on the Floor of the House, but Rachel Lomax has served the Bank well. She has also served successive Governments well, as a loyal, distinguished and hard-working civil servant. I know from my experience as Secretary of State for Social Security and then for Work and Pensions and as Secretary of State for Transport that Rachel Lomax was an excellent permanent secretary. Whatever she does in the future, I hope that the whole House will wish her well.