Topical Questions

Oral Answers to Questions — Treasury – in the House of Commons at 2:30 pm on 24th April 2012.

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Photo of Jane Ellison Jane Ellison Conservative, Battersea 2:30 pm, 24th April 2012

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.

Photo of Jane Ellison Jane Ellison Conservative, Battersea

What steps is my right hon. Friend taking to support successful small businesses that wish to take advantage of export opportunities?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We want to get small businesses exporting more, and UK small businesses have traditionally not exported as much as, for example, continental European small businesses. That is why UK Trade & Investment, under Lord Green, has set the specific ambition of doubling the number of small businesses helped by the Government. We want small businesses to be ambitious and look to overseas markets.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

The Chancellor has had a difficult few weeks since the Budget. To be told by his own side that he is an out-of-touch posh boy who does not know the price of milk must be particularly hard to take. I will ask him today not about the price of milk but—[Interruption.]

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. Let me say once and for all to the junior Whip, sitting next to a senior Whip: be quiet, do not heckle, and if you cannot keep quiet, leave the Chamber. Make a habit of that.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

Shall I start again at the beginning of the question? I am going to ask the Chancellor today not about the price of milk but about a price that he surely must have considered at Budget time. I will ask him a specific question. What is—

[

Interruption.]

I am going to ask the Chancellor a specific question that he must have considered at Budget time. What is the price of a litre of unleaded petrol at the pumps today, and what was it on Budget day a year ago?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

Of course, the price of petrol today is about £1.40 a litre. It was less a year ago, but the international oil price has gone up since—I think it is 10% higher than it was last year. That is why we have cancelled some of the fuel duty increases that the right hon. Gentleman voted for when he was in government, cut fuel duty and got rid of the fuel escalator that he supported in government.

Photo of Edward Balls Edward Balls Shadow Chancellor of the Exchequer

That is an answer that we will hang around the Chancellor’s neck for the next four months. He has admitted that the price of petrol is higher today than a year ago, when he decided it was too high for petrol duty to go up. Let me ask him a second question. His duty increase is due in August. If the price of petrol is still higher than the £1.33 a litre price of a year ago, will he commit now not to go ahead with the duty rise, or is the truth that he cut taxes for millionaires but does not understand about family budgets? Out of touch, out of friends and way, way out of his depth.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The right hon. Gentleman says it is my duty increase, but we are talking about his duty increase, which was set out in the March Budget before the last general election, which he voted for and helped to write.

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The right hon. Gentleman says I am the Chancellor, and he is right. Since inheriting those fuel duty plans from him, I have cut fuel duty, cancelled the fuel duty increases that he voted for and got off the fuel duty escalator that he supported. That is what I have done to ensure that families are better able to cope with the economic mess he presided over when he was in the Treasury.

Photo of Alun Cairns Alun Cairns Conservative, Vale of Glamorgan

I welcome the Financial Services Bill, which we debated yesterday. It is a significant step towards re-instilling confidence in the financial services industry, but does the Minister accept that regulators, including the current Financial Services Authority, have an obligation to work with other regulatory bodies that go beyond their competence to bring about negotiated settlements when the product is far more complicated than is covered by their jurisdiction, such as in the Arch Cru affair?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

My hon. Friend raises an important question. There are a number of cases—Arch Cru is one of them—in which different parties are in different jurisdictions. It is important that regulators work together, along with the parties involved, to ensure that a good deal is put in place to help investors.

Photo of John Mann John Mann Labour, Bassetlaw

A listed building that is dismantled and rebuilt as a new dwelling will be zero rated, but people will not be able to renovate an empty barn for the same price if it is VAT-able at 20%. Is that or is that not a perverse incentive to demolish empty listed buildings?

Photo of David Gauke David Gauke The Exchequer Secretary

As financial advice, I am not sure it is necessarily wise to dismantle and then rebuild a listed building to make a saving, but there is an anomaly in the tax system: people pay VAT for a repair on a listed building, but they do not pay VAT for an alteration. That does not seem right.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

What action have the Government taken to prevent multinationals from funnelling their profits into tax havens, as some do, rather than paying their taxes to the developing countries where they have subsidiaries?

Photo of David Gauke David Gauke The Exchequer Secretary

The Government have taken great action to increase tax transparency, and on ensuring that there is more of an exchange of information between jurisdictions. We have taken action to prevent Switzerland, for example, being used a place to facilitate tax evasion. In addition, Her Majesty’s Revenue and Customs provides considerable support to developing countries to improve their capability and capacity to collect tax revenues, which are very important.

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

Ramtech Electronics is a small business in my constituency that supplies wireless products to the static caravan industry. Tony Strickland, national key account manager, says that the effect of the Government’s decision to put VAT on caravans will be “catastrophic” for the industry and that it will

“undoubtedly result in job losses.”

Why does the Chancellor think that a tax cut for millionaires is more important than my constituents’ jobs?

Photo of David Gauke David Gauke The Exchequer Secretary

It is important to point out that there is already VAT on mobile caravans, camper vans, narrowboats and a range of products. We are listening to the concerns of businesses and tourists to ensure that we can implement the measure fairly.

Photo of Elizabeth Truss Elizabeth Truss Conservative, South West Norfolk

In 2005, Germany exempted businesses with fewer than 10 workers from unfair dismissal regulations and created flexible mini and midi-jobs. Since that date, youth unemployment in Germany has halved. What steps are the Government taking to improve flexibility and to get more young people into jobs?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We need to reform the labour market, which is why, as my hon. Friend will know, we have this month extended the qualifying period for unfair dismissal cases from one to two years. That has been welcomed and will encourage people to take on new employees. We also have a call for evidence on compensated no-fault dismissal. I have no doubt that she will make a submission to that call for evidence.

Photo of George Mudie George Mudie Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Opposition Whip (Commons)

In view of earlier answers on corporation tax, will the Chancellor tell the House how many FTSE 100 companies paid full corporation tax in the last available tax year? It would be understandable if he does not have the figure now, but will he place it in the Library of the House for hon. Members?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

As the hon. Gentleman knows, because he is an experienced Member and sits on the Treasury Committee, there is a very important principle of taxpayer confidentiality, so I am not shown the individual tax returns of businesses or indeed individuals. We have recently published data on the average tax rate that people on the highest incomes were paying under the last Labour Government, and we can see that it was very much lower than Treasury Ministers were telling us.

Photo of Mark Spencer Mark Spencer Conservative, Sherwood

Can the Chancellor tell me how many of my constituents will benefit from the lifting of the personal tax threshold?

Photo of Danny Alexander Danny Alexander The Chief Secretary to the Treasury

Information is not available at constituency level, but I can confirm that for the east midlands government region 1.7 million people will benefit in 2013-14 from the largest ever increase in the personal allowance, which was announced in the Budget. Some 152,000 people will have been taken out of tax altogether in the east midlands by the policies of this Government.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

It has been reported in the papers that the Chancellor is prepared to meet with charities so that he can explain his tax hike and tell them how he can get it right in the future. For the sake of consistency, will he also meet with the purveyors of pasties, church leaders and caravan operators and manufacturers so that he can tell them how he will get it right in the future and they can tell him to drop these VAT hikes?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

What I find extraordinary is that we have a Labour MP supporting the idea that the very wealthiest people in this country pay no income tax. That is an extraordinary thing for a Labour MP to advocate. As I say, we have made reforms in the Budget to improve the tax system and to ensure that people at the very top of the income scale pay some income tax.

Photo of Rob Wilson Rob Wilson Conservative, Reading East

The Thatcher Governments unleashed a decade or more of enterprise in this country. Young entrepreneurs today are still key to a private sector-led recovery, but only 3% of 18 to 24-year-olds set up their own business. Will the Chancellor consider further support for the new enterprise allowance and other schemes to increase assistance to young entrepreneurs?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The new enterprise allowance has been introduced and already some 10,000 people are developing their own business ideas using the incentive of the allowance. As I set out in the Budget, we are considering the case for enterprise loans. The Government provide a loan for people going to university, but what about a loan for people who want to start their own business? We will come to the House with ideas on that subject later this year.

Photo of Geraint Davies Geraint Davies Parliamentary Assembly of the Council of Europe (Substitute Member)

Rather than giving £10 billion to the IMF for the European bail-out fund, would it not be better to invest that money in a growth strategy in places such as Swansea to generate jobs and growth, and avoid the situation of the Chief Secretary suddenly announcing a further 5% cut in departmental spending, allegedly for a rainy day?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The political opportunism and empty opposition of the Labour party was brutally exposed yesterday when the shadow Chancellor opposed the contribution to the IMF and Mr Darling, a former Chancellor of the Exchequer and one of the few people to emerge with real credit from the last Government, completely contradicted him. Not only are the Opposition not taken seriously at home, they are not taken seriously abroad either.

Photo of George Freeman George Freeman Conservative, Mid Norfolk

Will the Chancellor join me in welcoming the announcement by GlaxoSmithKline of a £0.5 billion investment in advanced manufacturing in the north of England? Taken together with the £800 million investment by Tata in Wales and the IMF’s upgrade of our growth forecast by nearly 20%, does this not suggest that the Budget for business is working?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

My hon. Friend is right to point to the GSK investment. The chief executive of GSK explicitly credited the falls in corporation tax and the patent box for that decision. We have also had the investment from Jaguar Land Rover in the west midlands, the great news of Nissan’s investment in Sunderland and steel-making has returned to Redcar.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Education)

International connectivity is crucial to business in the north-east, and Newcastle international airport provides a vital link. Will the Government therefore support calls from regional airports for a congestion charge to be applied to air passenger duty to ensure the future viability not only of jobs and tourist income, but of international trade routes?

Photo of Chloe Smith Chloe Smith The Economic Secretary to the Treasury

As briefly discussed during last week’s debate on the Finance Bill, the Government are undertaking various pieces of work on aviation strategy and, more recently, received representations on regional congestion charges and other things during the APD consultation. I can confirm to the hon. Lady that, although I have not spoken to her personally about the matter, I am happy to meet her, her colleagues and representatives of those airports to hear more evidence of what they believe might occur if we set different tax rates.

Photo of Stephen Williams Stephen Williams Liberal Democrat, Bristol West

I am sure we have all received letters from constituents over the years saying that they did not want their taxes spent on one thing and preferred them to be spent on something else. It is right in principle, therefore, that the Government cap the ability of the super-rich to allocate taxes to charities of their choice. Will my right hon. Friend the Chancellor acknowledge, however, that universities and medical research charities have always depended on philanthropic support? In reviewing the cap on tax relief, will he ensure that those institutions’ interests are safeguarded?

Photo of David Gauke David Gauke The Exchequer Secretary

I am grateful to my hon. Friend for his support for the policy. As we said at the time of the Budget and in the Budget document, we are looking to explore with charities dependent on large donations how this can be implemented without it having a major impact on them. Of course, we will take into account the concerns of universities and others.

Photo of Ian Austin Ian Austin Shadow Minister (Work and Pensions)

Why does the Chancellor think his Budget is now widely seen as a complete and utter shambles?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

We cut business tax to make this country more competitive and to create jobs; we delivered an income tax cut for 24 million working people; we took 2 million low-paid people out of tax altogether; and, above all, we continue to clear up the economic mess left to us by the Labour party.

Photo of John Redwood John Redwood Conservative, Wokingham

What will we get for the £64 billion extra spending this year compared with the last year under Labour?

Photo of George Osborne George Osborne The Chancellor of the Exchequer

The plans we set out for public expenditure were measured, but they involved reducing the deficit. That has been very important. The public finance figures, published today, show that we are on track to meet our deficit targets. At the same time, we have found resources for things such as extra nursery education for disadvantaged youngsters, the pupil premium and all sorts of other things that support our objectives of a fairer and more balanced economy. [Interruption.]

Photo of Gemma Doyle Gemma Doyle Shadow Minister (Defence)

West Dunbartonshire is the most difficult local authority area in the whole of the UK in which to find a job, yet the Scottish National party Government have refused us any help and refused to meet me. Have this Government also abandoned West Dunbartonshire or can we expect help to do one thing—to create jobs?

Photo of Danny Alexander Danny Alexander The Chief Secretary to the Treasury

It is disappointing to hear that members of the Scottish Government have refused to meet the hon. Lady to discuss the help they could provide to her constituents. This Government’s actions—the youth contract, in particular—will be of significant importance to many young people in her constituency. In particular, there are the additional jobs subsidies available to businesses to take on young unemployed people in her constituency. I hope she will welcome that and promote it to businesses in her area.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

Tomorrow, the European Commission will publish its proposed 2013 budget. Will Her Majesty’s Government do everything they can to ensure that there is no increase in that budget? More importantly, will they use their veto on the multi-annual framework to ensure that there is no increase?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

My hon. Friend makes an important point. At a time when Governments across Europe are making difficult decisions to curb spending, it is completely unacceptable for the Commission to propose an inflation-busting increase in its budget and the medium-term financial framework. The Government will work with their allies to tackle those issues.

Photo of Stewart Hosie Stewart Hosie SNP Chief Whip, SNP Deputy Leader, Shadow SNP Spokesperson (Treasury)

In normal times, the mortgage standard variable rate rises or falls as the base rate goes up or down, but we are aware that some banks—not all—are increasing their standard variable rates now, while the Bank base rate remains near the zero-bound. Will the Chancellor take this opportunity to fire a warning shot across the bows of some of those banks not to increase their standard variable rates and so put more pain on to people likely to have had pay cuts and wage freezes over the past two or three years?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

It is important that we stick to the fiscal course to ensure that UK interest rates remain low for as long as possible. However, many banks face increased funding costs, partly because of the turbulence in the eurozone and partly because there is more competition for savings on the high street, and that works its way through to mortgage rates. It is important that banks provide the help they can to their customers to ensure they have the support necessary to deal with higher mortgage interest rates.

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. I am sorry. Treasury questions have long been an appealing fixture to colleagues, but demand has exceeded supply and we must now move on.