Topical Questions

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 16th June 2015.

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Photo of Michael Weir Michael Weir SNP Chief Whip 11:30 am, 16th June 2015

If he will make a statement on his departmental responsibilities.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

The core purpose of the Treasury is to ensure the stability and prosperity of the economy. I can report to the House that the latest inflation figures show that consumer prices index inflation is at 0.1%, which is good news for working families. Inflation is close to an all-time low, and wages are growing strongly, which is further proof that our long-term economic plan is working.

Photo of Michael Weir Michael Weir SNP Chief Whip

I thank the Chancellor for that response. However, one of his responsibilities is to ensure that the correct tax is paid. Given that there is huge public support for a Bill to tackle tax dodging, will he introduce such a measure in this Parliament to deal with the tax avoidance by UK companies both in the UK and in developing countries?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Every single Finance Bill we have introduced has been about tackling tax evasion and tax avoidance. Indeed we have also introduced into this country the diverted profits tax—almost a first in the world—which is tackling those international businesses that move their profits offshore to avoid tax. I can tell the hon. Gentleman that in the Budget we will take further action to clamp down on avoidance and evasion.

Photo of Glyn Davies Glyn Davies Conservative, Montgomeryshire

Last week, the Chancellor announced a simple new rule to ensure that we run a surplus in normal times. Does he agree that the Opposition’s description of this as no more than a “distraction” proves that no lessons have been learned and that they would make exactly the same mistakes if they were ever given the opportunity again?

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

Order. I am sure that the hon. Gentleman, who is a seasoned hand, was asking a question about the Government’s intentions. I am sure that he was not asking about Opposition policy, and that the Chancellor will not answer about Opposition policy.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Of course. Perish the thought, Mr Speaker. The Government will introduce their new approach to fiscal policy in the Budget. It will include a commitment to a surplus in normal times, and we look forward to wide cross-party support for that approach.

Photo of Chris Leslie Chris Leslie Shadow Chancellor of the Exchequer

Tomorrow the House of Commons will debate productivity, probably the central challenge facing our economic recovery. Will the Chancellor of the Exchequer be leading for the Government in response to that debate?

Photo of Chris Leslie Chris Leslie Shadow Chancellor of the Exchequer

The Chancellor clearly feels that productivity is not a priority of his. I am surprised that he will not be responding on this central question. After all, he will be here, as he will be acting as Prime Minister in Prime Minister’s questions tomorrow. If I can bring him back to the economy and he could rein in his personal ambitions for a moment, will the Chancellor set out where productivity features in his ambitions? While we have got the Chancellor here today—he is obviously not bothered about the debate tomorrow—will he explain why he failed to mention productivity in his March Budget speech just three months ago?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Well, I never thought I would say, “Bring back Ed Balls.” The Labour party needs to look at the productivity of its own Front Bench after those two dismal questions. I spoke in the Mansion house about the importance of raising the productivity of the United Kingdom. It is a challenge that has existed for many decades, as the hon. Gentleman knows. We will bring forward further proposals in the Budget to tackle the productivity gap in skills and infrastructure and the regional imbalance of our economy. Perhaps the Labour party could find some credible economic spokesman to take part in the debate.

Photo of Caroline Nokes Caroline Nokes Conservative, Romsey and Southampton North

Pensioners in Romsey and Southampton North have welcomed their new freedoms over their pensions. What evidence does my right hon. Friend have that they are taking advantage of those new freedoms?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Conservative Members believe that we should trust people who have worked hard and saved hard with those savings in retirement. These unprecedented pension freedoms have been widely welcomed. I can give the House the latest numbers—indeed, the first numbers—on how many people have taken advantage of the freedoms. So far, in the few weeks since they came into effect, 60,000 people have made use of them. More than £1 billion has been transferred out of people’s pension funds as a result. It is a sign that this is a real success, but we have to make sure that people get the best advice, that the market responds and that companies up their game in helping customers make use of these freedoms. We will be watching these things very carefully.

Photo of David Crausby David Crausby Labour, Bolton North East

Given that the population of Greater Manchester is bigger than those of both Wales and Northern Ireland and not far short of the population of Scotland, why are the people of Greater Manchester being denied the opportunity to decide whether they want a directly elected mayor? What is wrong with a constitutional referendum in England for a change?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I am sorry to hear that the hon. Gentleman disagrees with the Labour civic leadership across the authorities of Greater Manchester. They are elected, of course, and the elected national Government put together this deal. It will increase accountability in Greater Manchester because there will be an elected mayor whom people can hold directly to account.

Photo of Mike Wood Mike Wood Conservative, Dudley South

The latest Office for National Statistics figures show that disposable household income was rising more quickly in the west midlands than anywhere else in the country. Will the Chancellor consider creating further local enterprise zones such as Waterfront Business Park in Dudley South to help create further local growth, opportunities and prosperity for my constituents?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I welcome my hon. Friend to the House. I know that he will be a strong voice for Dudley. We are looking at smaller enterprise zones that are better fitted to areas such as his, to build on the success that we have had with the bigger enterprise zones. Enterprise zones for individual towns will help the west midlands and the black country to be an engine of growth for the British economy.

Photo of Richard Burgon Richard Burgon Labour, Leeds East

Is the Chancellor aware of the letter in The Guardian on Friday from 80 senior economists, in which they say—these are their words—that his plans are

“risky experiments with the economy to score political points…have no basis in economics” and

“are not fit for the complexity of a modern 21st-century economy”?

Does this not show that the Chancellor’s extreme cuts agenda is out on a limb and that his ideological fixations are outside the economic mainstream?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I do not read The Guardian every single day but I was made aware of that letter. I disagree. The same sort of people were saying the same things five years ago and now we have one of the fastest-growing economies of any major economy in the world. This is not the first thing on which I disagree with the hon. Gentleman. This morning he called for the abolition of the monarchy, so he is making an interesting start to his political career.

Photo of John Baron John Baron Conservative, Basildon and Billericay

As the economy continues to recover and the deficit falls, will the Chancellor consider increasing funding to the Foreign and Commonwealth Office, given that continual cuts under successive Governments have reduced its capacity and its skill base to such an extent that many people are saying that that has hindered our recent foreign policy decisions?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I know that my hon. Friend takes a close interest in the issue; indeed, he has been in contact with me about it. We absolutely want to make sure that Britain’s diplomatic reach is as wide as possible across the world, and we should commend my former colleague William Hague who, during his period as Foreign Secretary, despite the Foreign Office playing its part in delivering value for money and getting the best deal for taxpayers, was able to open more embassies and consulates around the world and increase Britain’s footprint on the global stage.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

The Chancellor’s Government keep talking about the Tory fantasy of a northern powerhouse, which never mentions Lancashire. Is it still his Government’s policy on the Treasury revenues from fracking that 1% will go to Lancashire and more than 60% will go to Whitehall?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I gave the original speech on the northern powerhouse in Lancashire, if we count Manchester as being in the traditional county—[Interruption.]

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

Order. Mr Jones, it is unseemly. I thought you were on an apprenticeship to become a statesman, but it has a long way to travel. It is courteous to hear the Chancellor. Let us hear him.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I think it will be one of those four-year apprenticeships, at this rate. I will say to the hon. Gentleman something which I know is not universally agreed with: I think the potential for shale gas in the north of England is a massive boost to the local economy there. I know it is not always popular with some local communities. That is why we have made sure that the benefits go to local communities, and we committed in our manifesto to creating a sovereign wealth fund for the north of England from the revenues from shale gas exploration so that we get a lasting benefit to the natural resources of that part of our country.

Several hon. Members:

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Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

My right hon. Friend has been enthusiastic and proactive in promoting the northern powerhouse, but will he shift his gaze southwards towards the midlands? I suggest to him that the midlands has the productivity that the United Kingdom needs, and the midlands engine needs promotion too.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I agree. That is why I was recently in both Derby and Birmingham after the election stressing that there is a massive potential for the midlands to be this engine of growth, and I am sure Lichfield will be a key part of that engine.

Photo of Wes Streeting Wes Streeting Labour, Ilford North

I am sure the Chancellor agrees that pro-business parties are pro-European parties, so when will he come off the fence and confirm that he will be leading the charge for Britain to stay in Europe?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

What we are fighting for is Britain to be part of a reformed European Union. Now that we have finally persuaded the Labour party to come to its senses and support the referendum, we can get on with the business of negotiating a good deal for this country.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

May we have a Treasury review into how effectively the balance sheets of housing associations are meeting the challenge of building new housing, looking in particular at their average cost of capital, the amount of leverage and whether a change in accounting policy would help to meet the housing challenge?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I congratulate my hon. Friend on his re-election; I enjoyed visiting him in Bedford just before the election. He raises an interesting point about how efficient housing associations are in increasing the housing supply, which is what we want them to do, and we are certainly looking at that at the moment.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Given that the Chancellor wants to create the west midlands powerhouse, what is he doing to protect the powers and identity of local authorities such as Coventry?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I met local authority leaders from Coventry, Birmingham and the surrounding local authorities only a couple of weeks ago, and I made it clear that it is up to them to come together in a combination that suits them and reflects local identities, and that my door is open for any discussions they want to have.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

Further to my right hon. Friend’s reply to our hon. Friend Andrew Percy, both my hon. Friend and I are big supporters of further devolution to northern Lincolnshire so that the economy can expand at an even faster rate. Can the Chancellor assure me that he will support any proposals that come forward from the leadership of our local authorities?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I can absolutely give my hon. Friend that assurance. Because of his campaigning, and that of our hon. Friend Andrew Percy, we have made sure that northern Lincolnshire is part of the northern powerhouse concept and that it is not left behind or neglected, as it was under the Labour Government.

Photo of Roger Mullin Roger Mullin Shadow SNP Spokesperson (Treasury)

The last Chancellor to run a budget surplus was Gordon Brown, thanks to a sell-off of gold at a rock-bottom price. Now this Government are pursuing a budget surplus by selling off RBS at a loss. When are we likely to see a banking strategy, rather than a costly political gimmick?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I never thought that I would hear the Member for Kirkcaldy and Cowdenbeath admit that the gold was sold off at the wrong price—I welcome the hon. Gentleman to the House. With the Royal Bank of Scotland we have a serious decision to make: do we continue to believe that at some point we might get back the money that the previous Labour Government put in, or do we take the advice of the independent reports that have been commissioned, and of the Governor of the Bank of England, which is that now is the right time to start selling RBS, and indeed that that might stimulate a higher share price? Above all, it will help to support the British banking system. We have had countless questions in this House about the impact on small businesses of what went wrong at RBS. I think that as soon as we can get that business back into the private sector, the more we can support the general economy, and indeed give a great future for the RBS work force.

Photo of Richard Graham Richard Graham Conservative, Gloucester

The Government’s support for more, better and higher apprenticeships has been critical to the halving of youth unemployment in Gloucester over the past year. The other side of the equation is making sure that work always pays, and many of us want to play a part in ensuring that that happens. Universal credit is the key. It will come to Gloucester later this summer. What does my right hon. Friend think will be the tangible and intangible benefits of seeing people able to work longer than 16 hours, increase their income and reduce welfare benefits?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is absolutely right that universal credit, the major reform of our welfare system that will be widely felt in this Parliament, will create a very simple system in which people know that if they work that extra hour, they will be rewarded for it. That simplicity, and the fact that people can keep more of their income by working that extra hour, will be a powerful incentive that makes work pay.

Several hon. Members:

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Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Education)

Yesterday, as a consequence of the refusal by Sinn Féin and the Social Democratic and Labour party to implement welfare reform, the Northern Ireland Assembly gave authority to the Departments to breach spending limits and increase spending by 6% over the block grant. What steps will the Chancellor take to ensure that Assemblies and Parliaments across the United Kingdom do not recklessly breach spending limits?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

The hon. Gentleman raises a serious question that I suspect this House will have to return to on a number of occasions. We have a clear agreement in the Stormont House agreement that we now expect all parties in Northern Ireland to implement, including Sinn Féin. Frankly, it is not acceptable for any devolved Administration simply to breach the spending limits that have been agreed with the United Kingdom Government, so that is something we will have to address. As he knows, the key is to implement welfare reforms that will not only deliver value for money for the taxpayer, but ensure that more people in Northern Ireland are released from the poverty trap and are able to work.

Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon

Yesterday, borrowing costs across Europe increased as the contagion from the Greek economic crisis spread. May I congratulate the Chancellor on the long-term economic plan, which, in contrast, has brought jobs and growth to the UK economy? May I also urge him to use the Budget to reduce the deficit by increasing resources for infrastructure, such as the £250 million needed for Crossrail 2, which will bring even more jobs to my constituency and to the UK?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

My hon. Friend is right to remind the House after an hour and five minutes of Treasury questions that out in the real world there are some serious economic risks, not least the risk that we see growing in Greece of a potential default and exit from the euro. People should not underestimate the damage that that would do to financial confidence. Of course, in the UK we take all steps to prepare for and protect ourselves from such eventualities, but the best thing that a Government can do is to ensure that it is living within its means, that it has a productive economy and that its public finances are in good order. That is what we are going to deliver in this Parliament.

Several hon. Members:

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