Topical Questions

Oral Answers to Questions — Treasury – in the House of Commons on 11th December 2018.

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Photo of Layla Moran Layla Moran Liberal Democrat Spokesperson (Education)

If he will make a statement on his departmental responsibilities.

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, and at this juncture the best way to achieve this objective is to back the Prime Minister’s Brexit deal, ensuring a smooth and orderly departure from the EU, delivering on the decision of the British people, securing a close economic partnership with our most important trading partners and protecting the jobs and living standards of our people. The deal will allow us to come together again and assure Britain of the brighter future it deserves.

Photo of Layla Moran Layla Moran Liberal Democrat Spokesperson (Education)

Modern universities will be hit hard by the unexpected changes to the teacher pension scheme. In fact, one is predicting a 5% reduction in its workforce, including around student support. Can the Chancellor give any assurances to universities struggling to cope with this change?

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

The changes to public sector pensions have resulted from increases in contributions that will ultimately benefit lecturers retiring from university and retiring teachers. We are looking, through the Augar review, at the question of higher education funding overall, but ultimately it is for universities to find that extra money.

Photo of Alex Chalk Alex Chalk Conservative, Cheltenham

On Saturday in my constituency I met Tom, a student at the University of Gloucestershire, who shares my concerns that online digital marketplaces, social media companies and search engines should pay their fair share of tax. What steps are being taken to ensure that they do precisely that?

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

I thank my hon. Friend for that very important question. The Government recognise that the current international tax regime is not fit for purpose when it comes to taxing certain types of digital platform-based businesses—the types to which my hon. Friend has referred—and we are therefore working with the OECD and the European Union to arrive at a multilateral solution to ensure that the right tax is paid. However, we have made it clear, and the Chancellor made it clear in the Budget, that in the event that we do not secure a multilateral agreement, we will move ahead unilaterally by 2020 to ensure that those businesses pay a fair share of tax.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

The merely synthetic construct that is before the House has nothing to do with the real concerns of my right hon. Friend John McDonnell and my hon. Friend Mr Sheerman. It is the dodgy deal—the tuppence-ha’penny Brexit deal—of the Prime Minister. I am led to believe that the Chancellor has ostensibly, but forlornly, attempted to mitigate the Prime Minister’s disastrous handling of Brexit. If that is the case, will he continue his endeavours by using the powers in section 31 of the Taxation (Cross-border Trade) Act 2018 to maintain the UK in a customs union with the EU?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

It is not the Government’s policy to maintain a permanent customs union with the European Union. Opposition Front Benchers often offer a customs union as if it were a magical solution, but it will not deliver us frictionless borders; it will introduce regulatory friction at our borders with the European Union, and it will introduce regulatory friction between Northern Ireland and the Republic of Ireland.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

The Chancellor’s answer shows that, just like Parliament yesterday, we have been treated with contempt by him, and he has been treated with contempt by the Prime Minister and brushed aside. Let me ask him again: in the national interest—not the Tory party’s interest, or his own interest—at what point will he break cover and use the powers in section 31 of the Act which he initiated and which his Ministers guided through Parliament? Or is this just another Tory parliamentary sham?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Those powers are there specifically to deal with the customs union that we will need to create with the Crown dependencies, not for the purpose that the hon. Gentleman is suggesting.

Photo of Bim Afolami Bim Afolami Conservative, Hitchin and Harpenden

I have been listening carefully to these questions, and it strikes me that from members of all the Opposition parties we hear pleas that business wants uncertainty to end, but at the same time they have been deliberately seeking to provoke chaos by not supporting the Prime Minister’s withdrawal agreement. Does the Chancellor agree that they are playing political games with the lives and jobs of the British people?

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

Order. I know that the hon. Gentleman was trying very hard, but—forgive me: I say this by way of kindly counsel to the hon. Gentleman, who is a new Member—questions must be about the policies of the Government, as the Clerk has just swivelled round to remind me, and not about the policies or tactics of the Opposition. We will leave that there, and come to Helen Goodman.

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

If he will make a statement on his departmental responsibilities.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I am very confident that my right hon. Friend the Prime Minister will succeed in the mission that she is undertaking today, and I look forward to her reporting to the House on the progress that she has made.

Photo of Priti Patel Priti Patel Conservative, Witham

Lower taxes and a simplified tax system are crucial to long-term economic growth and competition. Will the Chancellor consider introducing new tax reforms in the future, including a combination of income tax and national insurance, to improve the efficiency of our tax system?

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

I entirely agree with my right hon. Friend about the importance of low taxes. Under this Government, corporation tax has been reduced from 28% to 19% and will be further reduced to 17%; and through the increase in the personal allowance that was announced in the Budget, we have taken about 4 million of the lowest-paid out of tax altogether. As for my right hon. Friend’s specific point about aligning national insurance and income tax, that is a very complex thing to do. There would be a considerable number of losers, as well as some gainers. However, the Office of Tax Simplification has looked into it in the past, and we will keep it under review.

Photo of Sandy Martin Sandy Martin Shadow Minister (Waste and Recycling)

Given this country’s £5.9 billion net trading surplus with the EU in insurance, will the Chancellor take the opportunity of the demise of the withdrawal agreement to make financial services a part of the Prime Minister’s next attempt at a Brexit deal?

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

The City is very content with the deal we have on financial services, under which we would seek and secure enhanced equivalence decisions six months before the end of the implementation period, and the degree of dialogue with and support from the City has been constant throughout.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

Given the £900 million of additional funding for the Scottish block grant announced in the Budget, what discussions has the Chancellor had with the SNP Scottish Government about following his example and cutting business rates?

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

My hon. Friend makes a very good point. I have regular meetings with the Scottish Finance Secretary, and of course the Scottish Government have the opportunity in their budget tomorrow to match the business rate cuts we have made in England.

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

I met the travel association ABTA this morning and it had two requests for the Chancellor: first, that he rules out no deal, because implementing no deal preparations potentially puts its smaller members out of business; and secondly, to hear from the Chancellor and Government when the immigration paper will be available, because without it ABTA members can make no business plans.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I think I have been perfectly clear and consistent in expressing the view that no deal would be a very bad outcome for this country, and I will do everything I can to make sure that that is not an outcome we face.

A White Paper on the Government’s future migration policy will be published shortly.

Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

When criticising a Labour Budget in 2005, my right hon. Friend the Chancellor said that the taxpayer

“is entitled to be protected from retrospective or retroactive legislation.”—[Official Report, 7 June 2005;
Vol. 434, c. 1139.]

but through the 2019 loan charge, that is precisely what HMRC is now doing to thousands of people who acted in good faith and in accordance with the rules at the time. May I urge my right hon. Friend once again not to backdate the charge to before 2017?

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

I thank my hon. Friend for his question, but I have to fundamentally disagree with him. The arrangements entered into around disguised remuneration, for which the loan charge is being applied, were always defective at the time they were being used. They have been taken through the courts many times over many years by HMRC and been found to be defective. They also went through, in a particular case, the Supreme Court—the highest court in the land—and the scheme was found to be defective. So this is not a retrospective measure, but it is a question of tax fairness, and of course those who are involved can come forward and have discussions with HMRC, who, where there are difficulties around payment, will be sympathetic and enter into time-to-pay arrangements to make sure those people are protected as well as paying the right tax.

Photo of Graham Jones Graham Jones Chair, Committees on Arms Export Controls (formerly Quadripartite Committee)

IPPR North’s analysis has shown that in the south £326 per head is spent on infrastructure, while only £156 per person is spent in the north, and small towns like those in my constituency have been hit the hardest, with lack of infrastructure and the withdrawal of public sector services. We now find out this week that there will be a third bailout for Crossrail 2, costing £2.1 billion; the Government are simply going to give it a cheque. When is the north-west going to get a £2.1 billion equivalent?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

First, I should make it clear that the additional support we are providing to Crossrail is in the form of a loan that will be repaid to the Government by London, so it is London taxpayers and London farepayers who will meet the cost of the overrun. The north-west is now the second-highest region in the UK for transport investment: per capita investment has risen from £648 per year between 2006-07 and 2009-10 to £1,129 a year between 2014-15 and 2017-18.

Photo of Neil O'Brien Neil O'Brien Conservative, Harborough

It is very welcome that today’s figures show that wages are rising, unemployment is falling and we have a record number of people in work, but we still need more good jobs in Leicestershire. So, when the Leicestershire industrial strategy comes forward with exciting plans to boost the life sciences and small satellite manufacturing, will the Treasury look closely at getting behind it?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

The Treasury will look closely at that.

Photo of Meg Hillier Meg Hillier Chair, Public Accounts Committee

At our border, we need to ensure that we have security while securing freedom of movement of goods and people as well as gaining revenue. The head of HMRC has said that it will be almost impossible to do all those things if we crash out without a deal. The Chancellor keeps talking about a deal, but we are just over 100 days away from potentially crashing out, so what conversations is he having to ensure that we are not hit in the pocket as a result of a lack of revenue?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

We have made it clear that we will first prioritise the security of the UK, and that we will then prioritise the flow of trade. We will not prioritise the collection of customs tariffs. The hon. Lady will be aware that these are tariffs that we are not currently collecting; they would be additional revenues. We will treat that as something that we can do in slower time, if the situation arises.

Photo of James Heappey James Heappey Conservative, Wells

Later today the House will debate fuel poverty. Does the Chancellor agree that the greatest lever that we can pull to alleviate the challenge of fuel poverty is to incentivise home energy efficiency? Will he look at what the Treasury can do to address that?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

That is certainly one of the levers that we can pull, and I am happy to look again at how we support home energy efficiency.

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

When will the Government bring forward proposals to allow well-funded credit unions to provide low-cost credit cards and low-cost car loans, and to invest in other social programmes such as energy co-operatives and housing schemes?

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

Following on from the Budget, we have a series of measures to assist credit unions to expand their role in delivering affordable credit across communities. We have a scheme of work over the next three months to pilot interest-free loans and prize-linked saving schemes, to help credit unions to grow as they have been doing in recent years.

Photo of Jo Johnson Jo Johnson Minister of State (Department for Education) (Universities and Science) (Joint with the Department for Business, Energy and Industrial Strategy)

What do the Government make of the Centre for European Reform’s report this week that warned of a 60% fall in UK financial services exports to the EU in the event that we lose access to the single market and put a free trade agreement in its place?

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

The City remains very concerned to secure a deal in order to maximise the strong relationship that we have with the EU and with the rest of the world.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

What impact will Brexit have on our universities, particularly in Coventry? More importantly, our universities do projects with Europe and also work closely with the manufacturing industry, including companies such as Jaguar Land Rover. What are we going to do about that?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Our university sector is a vital asset to the UK. Over the past decade we have seen the universities working much more closely with industry, and that relationship is having a positive and advantageous effect on the growth profile and the technology uptake in the economy. As we leave the European Union, it is vital that our universities are able to go on exchanging students and teaching staff with European institutions, and we will do everything we can to ensure that that happens.

Several hon. Members:

rose—

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

Thank you, Mr Speaker. Banks that are guilty of the scandalous mistreatment of small businesses are allowed to design and oversee their own redress schemes, including determining the level of compensation paid to the victims. Does the Minister agree that Parliament and the regulator should take control of those processes?

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

I have always said that the banks need to do more to restore their relationship with SMEs, and I welcome the scheme that UK Finance has announced to address unresolved historical complaints. I look forward to meeting my hon. Friend next week, with the Chancellor, to discuss the Government’s position.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Armed Forces)

The Inverness and Highlands city region deal was agreed a little while ago, and that is very good news. A whole shedload of money has been spent on Inverness—well done, Inverness!—but precious little has been spent on the outlying areas, including Wick and Thurso. That is surely not in the spirit of the deal. Should there not be an audit of this kind of deal in future?

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

We are doing city deals right across Scotland and they are having huge benefits for the local economy. We have also announced in the Budget a freeze in whisky duty. The question now is how the Scottish Government will respond to that in their budget tomorrow. Will they cut income tax, and will they also cut business rates?

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

How many more trees will be planted as a result of investment announced in the recent Budget?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

A very large number. I will go back to the Treasury and write to my hon. Friend with a precise figure.

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

Can I politely suggest to the Chancellor that if he were to lodge a copy of his reply with the requisite statistical information in the Library, I do not say that he will be garlanded, but he might come close to it?

Photo of Emma Hardy Emma Hardy Labour, Kingston upon Hull West and Hessle

I am sure that the Chancellor will be as concerned as I am by the words of the chief inspector of schools, Amanda Spielman, who said that cuts to funding are hitting the sustainability and quality of our further education colleges. Instead of doing an impression of the Grinch, will the Chancellor be our Father Christmas and give our FE colleges the funding and presents that they want for Christmas?

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

We have protected the funding of FE colleges since 2015. We are also investing £500 million in T-levels and improved technical education. More low-income students are going to university and getting high-quality apprenticeships.

Photo of Robert Courts Robert Courts Conservative, Witney

I welcome the extra £1 billion for the armed forces that was announced in the Budget. Does my right hon. Friend agree that only this Government’s sensible management of the economy has made that possible?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Yes. There cannot be strong defence without a strong economy.

Photo of Ruth George Ruth George Labour, High Peak

In the next two months, the Royal Bank of Scotland will close all but 56 branches in cities across England, leaving banking deserts in towns and rural areas like mine. What is the Chancellor doing to use the Government’s shareholding to exert public pressure on RBS and ensure that we have no banking deserts?

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

The Government hold a 62.3% shareholding, but we do not run the bank. Decisions on the branch network are a matter for the bank.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

Is my right hon. Friend aware that one of the most successful companies in our country, Johnson Matthey in my constituency, is committed to having a fair-deal, not a no-deal Brexit because it feels that it is vital that there should be an orderly retreat, not chaos? Does he agree that the Prime Minister’s deal would achieve that?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Yes, and that is indeed the express view of the vast majority of businesses in this country.

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

Will the Chancellor work with the Minister for the Cabinet Office and the Secretary of State for Business, Energy and Industrial Strategy to support my ten-minute rule Bill on project bank accounts for Government projects? It will protect small businesses from losses when tier 1 suppliers such as Carillion and Interserve collapse.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I am happy to look further at the hon. Lady’s Bill. It is an interesting idea and I know that the Cabinet Office commercial secretariat has been looking at her proposals.