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Topical Questions

Vat – in the House of Commons at 2:30 pm on 6th September 2011.

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Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford 2:30 pm, 6th September 2011

If he will make a statement on his departmental responsibilities.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform banking, and manage the public finances so that Britain lives within her means. I can also announce today that the Office for Budget Responsibility will publish its economic and fiscal outlook on Tuesday 29 November, and that I will make a statement to the House on that day.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

Many hauliers in my constituency, like ordinary motorists, are concerned about the high price of fuel. Sadly, one Kent haulier went into administration during the recess, blaming diesel prices as a contributing factor. Can the Chancellor assure my constituents that he is listening to concerns expressed by fair fuel campaigners, and that he will do all he can to reduce the burden of high fuel costs on the motorist?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Of course I am well aware of the pain and burden that the big rise in the international oil price has caused to British businesses and, indeed, British families. That is why we took action in the Budget with a £2 billion reduction in fuel duty.

My hon. Friend mentioned hauliers in her constituency. The average haulier will benefit by approximately £1,700 this year as a result of the measures announced in the Budget, in comparison with the last Government’s fuel duty plans. Those measures were funded by an increase in tax on North sea oil companies, which was controversial and which was opposed by the Labour party.

Photo of Kevin Barron Kevin Barron Chair, Standards and Privileges Committee

The carbon price floor taxation policy within the electricity market reform is designed to push up the cost of electricity produced from high-carbon fuels such as coal. That could potentially close what remains of indigenous coal production in this country, and also vastly increase the costs of energy-intensive industrial users such as steelmakers. Is the Chancellor prepared to look again at that policy, or consider compensating the industries that will fall foul of it?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We are looking specifically at the impact not just of the carbon floor price but of all the other environmental policies of recent years on energy-intensive industries. I hope, in the autumn forecast at the end of November, to give the House an update of what we propose to do to help.

Photo of Mark Lancaster Mark Lancaster Conservative, Milton Keynes North

As we approach its first anniversary, is the Chancellor happy with the performance of the Office for Budget Responsibility?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Yes, I am happy with the performance of the OBR, because we have created a new institution in Britain that produces independent fiscal and economic forecasts. The absolutely astonishing revelation of the former Chancellor’s memoirs was how—[Interruption.] Let me tell Labour Members this: that book has not even been published yet, but they will be hearing a lot more about it in the months ahead, because it reveals the truth, not just about the last Government but about how the current shadow Chancellor operated in the last Government—the poisoned politics, the paralysed Government and the lack of a credible economic policy.

Photo of Vernon Coaker Vernon Coaker Shadow Minister (Home Affairs)

Thousands of working-age households in my constituency and millions across the country are set to lose up to 20% of their council tax benefit from April 2013. What assessment has the Chancellor made of the impact of that policy on incentives to work?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We published our impact assessments at the time of the spending review, and, like other savings in the welfare budget, the policy the hon. Gentleman mentions is designed to deal with a welfare budget that was completely out of control. Just a few weeks ago, the Opposition said they were going to come forward with a credible medium-term deficit reduction plan. Well, where is it? Every single measure we have put forward, they have opposed.

Photo of Anne McIntosh Anne McIntosh Chair, Environment, Food and Rural Affairs Committee

The Chancellor has stated his clear commitment to planning reforms, and local authorities are coming under increasing pressure to raise more locally than they receive centrally. Obviously, future developments are very attractive to them. Where in the planning reforms does the Chancellor assure the House there will be local democracy and a local voice?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We are giving a much greater role to local communities in determining their own local plan. We are also protecting the green belt and areas of outstanding natural beauty—of which I am sure there are a number in my hon. Friend’s constituency. I would make this point: these are sensible protections for the countryside, but we must also allow economically productive development in this country. We have to simplify a planning system that is completely unintelligible to most citizens. That is precisely what we are doing and I hope we will be backed on both sides of the House.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs), DUP Westminster Leader

Will the Chancellor give a categorical assurance to the House that the Government will swiftly and robustly reject any proposal from the European Commission, the European Parliament or any other European institution for a trans-European revenue-raising measure?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I can assure the right hon. Gentleman that I am certainly opposed to any new European tax.

Photo of Peter Aldous Peter Aldous Conservative, Waveney

The Lowestoft and Great Yarmouth enterprise zone can play a vital role in promoting growth. Will the Chancellor accept an invitation from me and my hon. Friend Brandon Lewis to visit our constituencies to see for himself the area’s great potential and to hear from business and council representatives about the work being done to create new private sector jobs?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I certainly will visit Great Yarmouth and Lowestoft—and on a couple of occasions during this Parliament, I hope. I am delighted that the bid for an enterprise zone from Great Yarmouth and Lowestoft was successful. It was a very impressive bid, involving intelligent use of East Anglia’s offshore energy resources, and I look forward to seeing how work on that is progressing when I visit.

Photo of Rushanara Ali Rushanara Ali Shadow Minister (International Development)

Given stagnating economic growth in the UK, US and much of Europe, and with forecasts predicting slow to no growth, will the Chancellor acknowledge that his economic plans are hurting but not working, and can he now tell us what his plan B is for driving growth in the UK?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I think that question involved a contradiction in that the hon. Lady pointed out that there was either slow or no growth in the United States and Europe and then somehow blamed my economic policies for that situation. That points to a broader observation: until the Labour party has some cognisance of what is happening in the world and how our policies are protecting the country with the largest budget deficit in the G20 from being caught in the firestorm that some other European countries have found themselves in, frankly it is not going to be at the races.

Photo of Stephen Williams Stephen Williams Liberal Democrat, Bristol West

Coming back to the crisis in some of the economies of the European Union, out of a crisis can sometimes come an opportunity. Will the Chancellor, next time he is meeting his fellow Finance Ministers, impress upon them the need further to deepen and reform the single market in order to promote trade and growth within the European Union?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I certainly will. I agree 100% with the point the hon. Gentleman is making, and on Friday we will be meeting as the G7, and then we have the ECOFIN meeting next week. He is absolutely right: as well as needing to tackle the fiscal policies and budget deficits, we need to make Europe more competitive. We need to make the whole of the European continent more competitive, and that involves supply-side reforms, deepening the single market and promoting free trade around the world, and I will be making that point today and in future.

Photo of Diana R. Johnson Diana R. Johnson Shadow Minister (Home Affairs)

Given the latest data on manufacturing, construction, exports and retail, can the Chancellor explain to me exactly where we will see growth and jobs coming from, especially in an area such as Hull?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I hope the hon. Lady welcomes the decision we made to make sure that Humberside had an enterprise zone. The way that this and other countries are going to get growth is not by taking yet another fix of the debt-fuelled spending bubble that got us into the mess we are in at the moment; it is by becoming competitive and having successful private sector businesses and a tax and regulatory environment that allows them to compete with not just the rest of Europe but the rest of the world.

Photo of Laura Sandys Laura Sandys Conservative, South Thanet

Like many of my colleagues, I want to thank the Chancellor for launching the enterprise zone and visiting—[Hon. Members: “Ah!”] Yes, in Sandwich. However, it is not just enterprise but trade and investment that need to come into the country. Does he believe that UK Trade & Investment is going to step up to the mark and ensure that we get the message across that Britain is open for business?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The short answer is yes. I was delighted to visit the new enterprise site in Sandwich with my hon. Friend, but we do need to promote exports. It is absolutely staggering that we export more to Ireland than we do to Brazil, Russia, India and China. That is the situation we inherited, and we have got to increase exports. The Chinese vice-premier will be in London on Thursday, and I hope we can fulfil our countries’ joint ambition to increase trade between the two countries.

Photo of Tristram Hunt Tristram Hunt Labour, Stoke-on-Trent Central

Given that increasing urban density increases economic productivity, and that countries with lax planning law such as Ireland, Greece and Spain are among the least competitive in Europe, why on earth is the Chancellor so intent on ripping up our planning system and destroying what makes England England?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I completely reject the premise of the hon. Gentleman’s question. As I say, green belt and areas of outstanding natural beauty will be protected, but we need to allow economically productive development. I have to say that his question is particularly puzzling as he represents the city of Stoke. Stoke applied for an enterprise zone, and one of the features of such a zone was that we were going to relax the planning rules.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

When the Eurostar is in France it is in a eurozone country, but when it comes through the channel tunnel into England’s green and pleasant land, the euro is not the sovereign currency. Last week, Eurostar refused to accept British money, even on the train in this country. Will the Chancellor make a robust complaint to Eurostar? [ Interruption. ]

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The Opposition remind me of the very good election slogan that we had—although it was not particularly successful—which was “Save the Pound”. We have managed to save the pound on the Eurostar—or rather, the company itself has anticipated questions such as the one from my hon. Friend. I am glad to hear that, as he travels to and from Brussels and Paris, he will continue to be able to buy his meals in pounds sterling.

Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

Before the Chancellor meets the head of the IMF on Friday, will he recognise that in warning that slamming on the brakes too quickly will harm the recovery, she has a point? Does not Britain’s experience illustrate that?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The point that the IMF has made consistently over the last two years is that countries with fiscal space can of course use it, but that Britain does not have that fiscal space. It made that point in its article IV assessment of the UK just a few weeks ago, and that is also the view of Christine Lagarde. As I say, she is coming to this country on Friday and we will hear what she has to say.

Photo of Margot James Margot James Conservative, Stourbridge

As the Chancellor has reassured the House that protecting the green belt is not incompatible with reforming the planning system, can he tell the House any more about how the Government can help to reduce the costs of the planning system for business?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Planning costs in Britain are among the highest in the world and planning delays are among the longest in the world. That is what we are seeking to deal with, so that we get economic development that is sustainable and protects our most cherished environments. That is what we are doing. What people are beginning to see, as this debate unfolds, is that we have to take some difficult decisions in this House if we are to have sustainable economic growth in a very competitive global economy. The planning reforms are part of that plan.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

The massive increases in energy prices are hitting every family and business in this country. Before the general election, the Conservative party, and indeed the Prime Minister, promised to take direct action and curb excessive rises. What action does the Chancellor intend to take to cure this problem now?


I think Mr Owen well knows that a substantial rise in our energy bills is caused by a high percentage going to manufacturing, erecting and running those wind turbines which desecrate our...

Submitted by John Bakewell Continue reading (and 1 more annotation)

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I took action in the Budget to cut fuel duty.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

What would happen to domestic interest and mortgage rates were Britain to lose its triple A status by relaxing its financial deficit reduction targets?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Of course the benefit of having a credible economic policy and a credible fiscal policy is having low market interest rates. Greece today has one-year bond rates of 82% and Italy’s bond spreads have gone out in recent days. We are borrowing money at 2.3%, and that is, in part, because we have a credible economic policy. If we did not have plans to deal with the largest budget deficit in the G20, we would find ourselves in a similar position to Italy or Spain.

Photo of Naomi Long Naomi Long Alliance, Belfast East

The Chancellor will be aware that air passenger duty has a particular impact in Northern Ireland, particularly as it places pressure on business and discourages tourism. What action does he intend to take, and when, to ensure that we can maintain our links, particularly our transatlantic ones?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I am very aware of the issue relating to the continental flight from Belfast to the eastern seaboard of the United States, and I have spoken to Northern Ireland’s First Minister and Deputy First Minister about it. I can see that there is a particular challenge because of the proximity of the airport in Dublin, and the British embassy in Washington has also been very active in dealing with the company in the United States. I can assure the hon. Lady that we are on the case.

Photo of Jo Swinson Jo Swinson Liberal Democrat, East Dunbartonshire

There is still huge public anger that taxpayers have had to bail out the very banks whose cavalier and risky behaviour led to the global economic meltdown. Further to the eloquent question from the Father of the House, Sir Peter Tapsell, when Vickers reports next week will the Chancellor ensure that he acts promptly to introduce any necessary legislation to implement the recommendations, in order to avoid a repeat of the financial crisis, and that he does not listen to the vested interests arguing for delay?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

It was this coalition Government who established the Vickers report. Those questions were simply not asked by the previous Government—we are asking those questions. However, I am afraid that the hon. Lady will have to wait until Monday to hear the Government response to the Vickers report.

Photo of Iain Wright Iain Wright Shadow Minister (Education)

Harold Macmillan, the most successful Chancellor and Prime Minister that Eton has ever produced, once said that effective Governments need to adapt to “Events, dear boy, events.” Could the Chancellor, dear boy that he is, outline to the House the events that would warrant a change in his economic policy, or is he woefully negligent, blinkered and complacent?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

I think the hon. Gentleman is being rather harsh on Hugh Dalton, who I think also went to Eton.

Photo of Matthew Hancock Matthew Hancock Conservative, West Suffolk

Do not recent revelations show that the previous Government were masters of nothing?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

That is a brilliant plug for my hon. Friend’s new book. I am sure that the whole House will want to read it, because it will remind us of everything that went wrong under the previous Government.

Several hon. Members:

rose —

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons

Order. Time is up. I would love to call more hon. Members, as I enjoy nothing more than hearing my colleagues ask and answer questions, but I am afraid that we must move on to the ten-minute rule motion. I call Mr Douglas Carswell.