Topical Questions

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 3rd July 2018.

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Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

My principal responsibility is to ensure economic stability and the continued prosperity of the British people, both during this period of heightened uncertainty and beyond it, after Brexit. I will do so by building on the plans that I set out in the autumn Budget and the spring statement. The Prime Minister recently announced a five-year NHS funding package that will boost spending on health by more than £20 billion a year in real terms in England alone. She also confirmed that we will stick to our fiscal rules and continue to reduce debt. It is our balanced approach to the public finances that enables us to give households, businesses and our public services targeted support in the near term, as well as to invest in the future of this country and to get debt down to be fair to the next generation.

Photo of Tom Brake Tom Brake Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union)

The Chancellor mentioned the NHS funding package. Will he confirm how much of that extra funding will come from the Brexit dividend, and how much will come from higher taxes for businesses and individuals, and on alcohol and fuel?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Obviously, the element of funding that can be provided by net savings from contributions to the European Union will depend intrinsically on the deal that we negotiate with the European Union. We will be working to get the very best possible deal that we can for Britain to ensure that that contribution makes up the largest possible proportion of the additional NHS funding.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

Only 15% of people who start their working lives in entry-level jobs in this country manage to rise above that level. This country would be more prosperous and socially just, and would have a bigger tax base, if we could help them. What more can we do to help that segment of the population?

Photo of Elizabeth Truss Elizabeth Truss The Chief Secretary to the Treasury

My hon. Friend is absolutely right. The way in which we will get higher wages is by improving productivity and skills, which is why we are investing in a record level of apprenticeships and the national training partnership.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

As my hon. Friend Mr Bailey pointed out, the British Chambers of Commerce has said today that its patience with the Government over Brexit is at “breaking point”. Its sense of frustration reflects accurately what trade unions and businesses across the country feel. All the British Chambers of Commerce wants are answers to some very basic questions, so will the Chancellor and those on the Treasury Bench provide some answers today? Post-Brexit, will goods be subject to new procedures and delayed at border points? Will regulation checks on goods conducted in the UK be recognised in Europe? Will firms be able to transfer staff between the UK and the EU as they do now? Above all else, will Ministers stop squabbling and provide some answers to these vital questions?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

It is fascinating to see the right hon. Gentleman posing as the champion of business when he has been attacking and undermining business ever since he got into his current position. Yes, I recognise all the questions he asked. The Cabinet will meet on Friday to set out our way forward in our negotiation with the European Union. We recognise that this is now urgent and that we need to make progress. The right hon. Gentleman mentioned minimising frictions and maximising flexibility for employers in order to protect jobs and investment. We agree with him and the British Chambers of Commerce on all those things, and we will be looking to deliver a Brexit that maximises employment and prosperity in this country.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

The Chancellor does not have to worry about others undermining capitalism; the Government are doing a pretty good job themselves.

When the warring factions in the Cabinet meet this weekend, it is the role of Treasury Ministers to bring them into the real world and point out to them firmly the real cost of a no-deal Brexit for jobs, the economy and all our living standards, so will the Chancellor tell us today the Treasury’s latest estimate of the cost of no deal, its consequences for the economy and the potential loss of jobs? Surely it is time for him to show a bit of grit and to make it clear that no responsible Chancellor could remain in a Cabinet that is so recklessly putting our economy at risk through no deal?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I assure the right hon. Gentleman that I will be setting out for my colleagues, in the privacy of our Cabinet meeting on Friday, the Treasury’s assessment—indeed, the cross-Whitehall economic group’s assessment—of the implications of potential routes forward. However, as the Prime Minister has said, we cannot give a running commentary in public on a matter about which we are in intensive negotiation with our European interlocutors. I have said before, and say again today, that when the time comes for Parliament to vote on our proposed package, I will make sure that all the available material is put into the public domain so that Members of Parliament are properly informed.

Photo of James Cleverly James Cleverly Deputy Chair, Conservative Party

In Braintree, in Halstead and in the villages of my constituency, including my own lovely village of Earls Colne, there are a number of thriving businesses in retail, manufacturing and other sectors, but at the moment there is a disparity between the tax treatment of physical businesses and that of digital businesses. What plans do Ministers have to rebalance the tax treatment of those two types of businesses?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My hon. Friend raises a very important point. The Government are determined that we should have an international tax regime that is appropriate to the digital businesses to which he refers, particularly search engines, online marketplaces and social media platforms. We are working with the OECD and the European Union on a multilateral response. In the absence of that, we are prepared to act unilaterally to make sure that fair taxes are paid by those businesses.

Photo of Ellie Reeves Ellie Reeves Labour, Lewisham West and Penge

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 was intended to save £450 million a year on legal aid, but last year’s spending was more than £950 million down from 2010 levels. As we find ourselves in an access to justice crisis, what discussions have Treasury Ministers had with the Ministry of Justice about increasing the money available for legal aid as part of the LASPO review?

Photo of Elizabeth Truss Elizabeth Truss The Chief Secretary to the Treasury

We are conducting a review of LASPO at the moment. I have regular discussions with the Secretary of State for Justice, and we are making sure that the Department has the resources it needs.

Photo of Bob Stewart Bob Stewart Conservative, Beckenham

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?

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

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.

Photo of Stephen Lloyd Stephen Lloyd Liberal Democrat Spokesperson (Work and Pensions)

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?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The issue that the hon. Gentleman identifies is an important element of the tax avoidance that has been happening in our country. The vast majority of people pay the correct level of tax, but there have been schemes, such as the disguised remuneration schemes to which he refers, through which essentially very little tax indeed has been paid. The Government believe that that is wrong and that we should act to clean up the arrangements. We have given individuals until April 2019 to do exactly that. On the support that he mentions, HMRC’s door is of course always open for individuals in that situation to have discussions. I would urge all those individuals to make contact with HMRC to find a sensible way forward.

Photo of Nicky Morgan Nicky Morgan Chair, Treasury Committee

I warmly welcome what the Chancellor says about putting all information before Parliament before we vote on the final withdrawal agreement later this year, but of course that will not be the end of parliamentary involvement, because we will have to onshore all the current EU financial services legislation, including the binding technical standards. Will the Chancellor set out the Treasury’s thinking so far about how that process will be democratically accountable to Parliament or perhaps the Select Committees?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

My right hon. Friend asks about Parliament’s role in dealing with the onshoring of a very large number of financial services regulations. Some of them will be dealt with through a parliamentary process, but other areas of financial services regulation are dealt with by the independent regulators—the Financial Conduct Authority and the Bank of England. I will write to her and give her as much detail as I can about how that will break down between the different categories.

Photo of Imran Hussain Imran Hussain Shadow Minister (Justice)

The Chancellor and his Ministers accuse Labour of doom and gloom. Well, let me ask him this: what does he say to the hundreds of people in my constituency who are homeless as a result of his austerity? What does he say to the parents who send children to school hungry as a result of his austerity? What does he say to the communities that have been devastated as a result of his austerity? Is it not time that the Chancellor came out of his ivory tower and connected to reality?

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

The hon. Gentleman is a cheeky chappie in this Chamber. I counted no fewer than four questions, to which I know the Chancellor, with his customary intellectual dexterity, will reply with one answer, embracing the gamut of issues if he wishes.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Indeed, Mr Speaker. What I will say is that we have spent the last eight years cleaning up the mess that was left behind for us by the last Labour Government and trying to mitigate its impacts on ordinary families up and down this country. It is the same whenever Labour gets into power: it is always ordinary people and the most vulnerable in society who suffer the most, and it is always the Tory party that has to clean up the mess.

Photo of Peter Aldous Peter Aldous Conservative, Waveney

To follow on from the question asked by Stephen Lloyd, the retrospective nature of the 2019 loan charge could bankrupt thousands of people. Will the Government revise legislation to ensure that that does not happen, with the loan charge only applying to disguised remuneration loans made after the passing of the Finance (No. 2) Act 2017?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

This is not retrospective legislation. The activities and arrangements entered into by those who are in scope of this measure were not legal when they were entered into, even though they may have been entered into in the past. The loan charge is there not to apply penalties for that behaviour, but to ensure that those individuals pay the right amount of tax.

Photo of Lucy Powell Lucy Powell Labour/Co-operative, Manchester Central

A critical decision is currently with the Treasury on a life sciences grant that would create and secure hundreds of highly specialist jobs in Manchester. The private sector cornerstone company at the heart of that bid needs a decision by mid-July before it goes elsewhere in Europe. After months of indecision, will the Government now give us the okay on that bid as a matter of urgency?

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

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

Photo of Iain Duncan Smith Iain Duncan Smith Conservative, Chingford and Woodford Green

There was a recent announcement about extending contracts for rental homes to three years and losing the six-month rental position. May I urge the Treasury to look carefully at that? The last thing we want is fewer rental homes on the market and higher costs, as that would also have an impact on welfare costs.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

That consultation was announced by the Secretary of State for Housing, Communities and Local Government. I am acutely conscious of the risks that my right hon. Friend sets out. I assure him that I have looked very carefully at the wording of the consultation and I am confident that we will not fall into the trap that he suggests. We are looking at making a three-year term the default option for private sector renting.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

In its report published today, which was commissioned by the Co-op party, the New Economics Foundation identifies lack of access to finance as a significant inhibitor in the growth of the co-op sector. While I am grateful to the Economic Secretary to the Treasury for his interest in this area, I wonder what steps the Treasury might now take to tackle that problem.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

I held a workshop with representatives of various credit unions this week, and one with community development financial institutions last week. I have convened a working group from the financial inclusion taskforce, which will meet in September to consider urgently expanding access to credit options on better terms than the high-cost ones that exist in the market. We are doing all that we can to incentivise growth in that sector.

Photo of Gareth Johnson Gareth Johnson Conservative, Dartford

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?

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

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.

Photo of Clive Efford Clive Efford Labour, Eltham

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?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

We did not announce any reckless tax cuts in the manifesto last year. The Prime Minister made it very clear in her announcement about NHS funding that we will continue to deliver on our fiscal rules, and we will continue to ensure that debt falls. I will make announcements at future fiscal events explaining exactly how we will do that.

Photo of Robert Halfon Robert Halfon Chair, Education Committee

Given that the independent Centre for Economics and Business Research has said that the fuel duty freeze has contributed to creating 121,000 jobs, and that the Treasury said in 2014 that the benefits of the fuel duty freeze had offset the loss in tax income, does the Minister not agree that it would be absolute madness to raise fuel duty and hit working people up and down this country?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I thank my right hon. Friend for his very relevant and, may I say, predictable question—he has been a doughty campaigner on this particular issue—but all I would say to him is that we will of course be looking at taxation, with everybody in their different ways paying a little bit more, to make sure that we fund the significant amount we have now committed to our national health service.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention), Shadow PC Spokesperson (Business, Energy and Industrial Strategy)

Rail electrification and the Swansea Bay tidal lagoon have both been scrapped by the British Government because they were not deemed good value for money. When it comes to designing the criteria for the proposed UK shared prosperity fund, will an immediate return on investment be the priority, as with every project scrapped in Wales?

Photo of Elizabeth Truss Elizabeth Truss The Chief Secretary to the Treasury

We are looking closely at the shared prosperity fund to make sure that it delivers best value for money right across the UK, and I am in discussions with the Welsh Secretary about that.

Photo of Jeremy Quin Jeremy Quin Conservative, Horsham

What is my hon. Friend’s reaction to the FCA report on doorstep lending, and does it go far enough?

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The report is a welcome step forward, and I note the provision that is made for further steps if the proposed measures do not have an effect. I will be meeting Andrew Bailey tomorrow morning to discuss it further.

Photo of Emma Reynolds Emma Reynolds Labour, Wolverhampton North East

Over 1,600 people work at the Jaguar Land Rover engine plant in Wolverhampton, and the car industry has serious concerns about the Government’s plans to leave the customs union. Will the Chancellor guarantee that, when he goes to Chequers later this week, he will only sign up to a customs arrangement that preserves just-in-time manufacturing and integrated European supply chains?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I assure the hon. Lady that on Friday, as I have done consistently for the past two years, I will argue for a future relationship with the European Union that protects our important supply chains, protects British jobs and protects British business.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

British insurers, such as the ones based in Chelmsford, face a dilemma over what will happen to their European clients’ contracts: it would be immoral for them not to pay out on claims, but illegal if they do so. Will you urge the European regulators to come up with the same sensible, pragmatic solutions as the British regulators?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Yes, Mr Speaker, I will. I can tell my hon. Friend that we have established a European working group between the Bank of England and the European Central Bank to look at questions of contract continuity and other threats to financial stability over the period when we leave at the end of March. That will be looking at insurance contracts, and it will also be looking at the very large number of outstanding derivative contracts that could also, theoretically, become unenforceable at that point.

Several hon. Members:

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Photo of Chris Williamson Chris Williamson Labour, Derby North

Public services define a decent society, but analysis by the Local Government Association has revealed that councils face a £8 billion black hole by 2025; public services are in meltdown. When will the Chancellor stop behaving like a public services vandal and start resourcing the public services that communities desperately need?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

That is the answer, Mr Speaker.

There will be a spending review next year, when we will look at the overall spending envelope and the Government’s priorities across the entire range of public spending.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

I was pleased to welcome the Chief Secretary to the Treasury to my constituency a couple of weeks ago. Does she agree that the enthusiasm that we heard from local businessmen for free ports and free zones could be the way ahead for economic growth in Immingham and the surrounding area?

Photo of Elizabeth Truss Elizabeth Truss The Chief Secretary to the Treasury

I was hugely impressed by the enthusiasm in Grimsby, Cleethorpes and Immingham for more development and more opportunities for free zones—and also by the fantastic fish and chips we had on Cleethorpes pier.

Photo of Barry Sheerman Barry Sheerman Labour/Co-operative, Huddersfield

On his way to Chequers, will the Chancellor give a thought to health trusts such as Calderdale and Huddersfield NHS Foundation Trust? It still cannot deliver the healthcare that my constituents and people in the rest of west Yorkshire want because of the PFI hanging around their necks. Will he do something about PFIs?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I am afraid that I have to remind the hon. Gentleman that 86% of all PFI contracts currently in place in the NHS, draining money out of NHS trusts, were put in place by the previous Labour Government.

Several hon. Members:

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Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

The all-party parliamentary group on fair business banking is undertaking an important body of work on dispute resolution between banks and business. We will give it a parliamentary launch next week. Once the Minister has had time to digest the contents of that report, will he meet us to see how we can take the recommendations forward?

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

I eagerly await the report’s launch next Wednesday. I will be happy to meet the all-party group and make a judgment about the best outcome on that issue, along with three other streams of work, in the autumn.

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs)

Ending tax secrecy in the overseas territories will bring in £10 billion a year. Will the Chancellor organise a lunch for my right hon. Friend Dame Margaret Hodge, Mr Mitchell and the entire Labour Whips Office, who were instrumental in securing this change?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

When I have the money in the bank, I will invite them around for a glass of champagne.