Topical Questions

Treasury – in the House of Commons on 2nd November 2021.

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Photo of Duncan Baker Duncan Baker Conservative, North Norfolk

If he will make a statement on his departmental responsibilities.

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

Last week’s Budget delivered a stronger economy for the British people, with stronger public finances; support for business; stronger public services; investment in infrastructure, innovation and skills to drive future growth; and a significant tax cut for the lowest-paid, because this will always be a Government who support and reward work.

Photo of Duncan Baker Duncan Baker Conservative, North Norfolk

My constituent Peter Phillips fell victim to the loan charge in 2019 and settled before 30 September 2020. HMRC advised him, like many others, that that was the right thing to do. In effect, those who settled before the Morse review did not get the benefit of the changes that were implemented: my constituent paid more than someone who disclosed nothing to HMRC. Does my right hon. Friend think that was in the spirit of the Morse review? Has HMRC got it wrong?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

It is obviously difficult for me to comment on the case of a particular individual. The previous Chancellor, my right hon. Friend Sajid Javid, asked Lord Morse to conduct an independent review and the Government accepted and implemented the vast majority of its recommendations. People who settled early had the benefit of certainty from their settlement, but my hon. Friend should write to the Financial Secretary to the Treasury and we will ensure that we look at that case, as he requests.

Photo of Rachel Reeves Rachel Reeves Shadow Chancellor of the Exchequer

According to the Office for Budget Responsibility, the Government’s supply chain chaos, woefully inadequate post-Brexit planning and a lack of HGV drivers have contributed to higher inflation. The cost of the weekly shop is already going up and up, as the Chancellor will have heard from shoppers in Bury last week. Does he have any idea of how much the average weekly supermarket shop is expected to increase in the next year for a typical family?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

We are cognisant of and aware that there is price inflation; indeed, last week’s Budget addressed that and explained to the British people some of the global factors that are behind the rise in prices and are not unique to this country. As I said then, where this Government can act, we will. Whether it is the interventions for HGV drivers that my hon. Friend the Exchequer Secretary to the Treasury set out, the £0.5 billion household support fund or, indeed, the freezing of fuel duty, this Government are doing what they can to help with the cost of living.

Photo of Rachel Reeves Rachel Reeves Shadow Chancellor of the Exchequer

Let me help the Chancellor with the answer to that question. The typical family shop is likely to go up by £180 more next year. It is not just food prices that are rising: gas and electricity bills are already up by £139 and they are only going to go up more. The Chancellor had the opportunity in the Budget to help people with their gas and electricity bills by reducing VAT to 0% through the winter months—something that Labour has called for and that the Prime Minister backed when he was campaigning to leave the European Union. Who should the public blame for VAT on heating bills not being cut: the Prime Minister, for not keeping his word, or the Chancellor, for choosing to cut taxes for bankers instead?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

With regard to a VAT cut for fuel, perhaps I should point out to the hon. Lady some of the remarks from independent commentators about what that would do. The Institute for Fiscal Studies said that the benefit would accrue “to higher-income households.” The Resolution Foundation said a VAT cut

“would not be targeted and would be quite expensive”.

Tax Research UK said:

“This cut will not help the poorest much…this plan is a subsidy to the best-off, not the least well off.”

Instead, we have provided £0.5 billion, targeted at those who need our help. The hon. Lady mentioned £108; the household support fund will be able to provide £150 to between 2 million and 3 million of the most vulnerable families in our country. Indeed, the national living wage is going up next year, which will ensure a £1,000 increase for someone who works full time on the national living wage, and because of the cut to the universal credit taper a single mother with two kids who works full time and rents will be £1,200 better off.

Photo of Mark Menzies Mark Menzies Conservative, Fylde

I thank the Chancellor for his commitment of £75 million to preserve civil nuclear fuel manufacturing in the UK. As my right hon. Friend will know, Springfields site in Fylde is the only civil nuclear manufacturing site in the UK, and efforts are ongoing to diversify projects undertaken on the site to safeguard its future. Will he agree to look into proposals to support manufacturing on the site and help beat off international competition to bring those jobs and skills to Springfields?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

First, may I put on record my thanks to my hon. Friend, who raised this issue with me some months ago in the run-up to the spending review? I hope that he and his communities are pleased with the funding that was allocated, thanks to his and other interventions. I am of course prepared to work with him and the Secretary of State for Business, Energy and Industrial Strategy to consider all relevant proposals and assess the right options for the taxpayer in this country.

Photo of Kim Johnson Kim Johnson Labour, Liverpool, Riverside

Hospitality is one of the major sectors in Liverpool, Riverside, representing up to 20% of the economy and accounting for 50,000 jobs and 4,000 businesses this time last year, but, sadly, many have been forced to close due to covid. While the freeze on VAT on hospitality until April next year is welcome, the 50% hike to bring it up to 20% in six months’ time is causing a real panic to small businesses in my constituency. Will the Chancellor acknowledge that the planned hike to VAT in hospitality poses a significant risk to our economic recovery and that what we need now are measures that shore up our recovery rather than slow it down?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

We did have a measure in last week’s Budget to support the hospitality sector with its recovery, and that is the £1.7 billion cut to business rates next year. That represents the largest single-year cut to business rates in more than 30 years outside of the coronavirus. It provides a 50% discount to hospitality businesses, which I know are important to our local communities. I am sad that the hon. Member did not raise the not one but two levelling-up fund bids that Liverpool enjoyed last week, which I know will also help to regenerate parts of the city and provide improved transport connections to benefit local businesses.

Photo of Robert Largan Robert Largan Conservative, High Peak

Last week’s Budget included lots of positive news for the High Peak, such as the tax cut for the lowest paid and the 50% business rate relief for the high street. However, plenty of other towns across the north were celebrating additional millions of pounds of investment through the levelling-up fund. Unfortunately, High Peak was not one of those areas because High Peak Labour council failed to submit a bid on time. It has now agreed to submit a bid and I am keen to work on a cross-party basis with it, but can the Chancellor assure my constituents that there will be a second round and that High Peak will still be treated as a top priority for levelling up?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

I am happy to provide my hon. Friend with that reassurance and I hope that his council engages constructively with him, as so many others have and have seen the benefits of that in last week’s announcements. We will open round 2 in due course and it will most likely launch no later than the spring. I can tell him also that we have no plans to change the current way that we assess the priority categorisations, so High Peak should remain as it was.

Photo of Sam Tarry Sam Tarry Shadow Minister (Transport)

Does the Chancellor agree with the Conservative party donor, Mohamed Amersi, who once claimed that the Tories were operating an access capitalism scheme for their major donors, and described corruption as a “heinous crime”, but who was later seen to have been part of a £162 million bribe to the daughter of Islam Karimov, the awful former president of Uzbekistan? If so, can he look at this and bring forward the response to the Pandora papers, particularly the Registration of Overseas Entities Bill?

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

The Government are committed to making the UK a hostile place for illicit finance and economic crime and ensuring that all donations to political parties comply with the legislation that the Labour party enacted in Government. We have taken tough action through our No Safe Havens strategy to ensure that the correct UK tax is paid. Our landmark 2019 economic crime plan builds on that, and we will continue to work on these matters.

Photo of Stephen Metcalfe Stephen Metcalfe Conservative, South Basildon and East Thurrock

As my right hon. Friend may know, this week is Evidence Week. Will he therefore let the House know whether, in his opinion, the evidence still indicates that the proposed lower Thames crossing represents value for money?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

I know that my hon. Friend has paid close attention to this issue, which obviously has a particular impact on his constituency. He will know that the current Dartford crossing is one of the most congested pinch points in the entire strategic road network, which is why the Thames crossing development is part of the Department for Transport’s plans. We also recognise that it needs to be brought about in a way that maximises the benefits and mitigates the cost to local communities and businesses. The commitment does include an obligation to create tens of thousands of new jobs. I understand that National Highways has recently launched a consultation, in which I know my hon. Friend and his communities will be engaged.

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

In reforming domestic air passenger duty, the Chancellor could have done something really clever; he could have incentivised the use of low-carbon forms of transport domestically, and in areas where those do not exist, mitigated the impact with a best alternative. Instead, he has done something that is making travel relatively more expensive for those low-carbon alternatives. How on earth, in the week of COP26, is this contributing to the Government’s net zero efforts?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

As has been pointed out about three times today, alongside the cut in domestic air passenger duty, we introduced a new ultra-long-haul band with a higher rate. The net effect on carbon emissions of those two things is at least a wash, and one independent forecaster said that it would actually reduce carbon emissions. That comes alongside significant investment of £180 million to incentivise sustainable aviation fuel, and billions more for electric transportation for consumers.

Photo of Andrew Selous Andrew Selous The Second Church Estates Commissioner

With many thousands of new homes going up to the west of Leighton Buzzard and the north of Houghton Regis, will the Government ensure that there is a direct link between thousands of new homes and increased general practice capacity?

Photo of Simon Clarke Simon Clarke The Chief Secretary to the Treasury

The Government are focused on delivering more homes where they are most urgently needed, but we need the right infrastructure in place to facilitate this. Many of the Government’s core housing supply programmes, including an additional £1.5 billion announced at the spending review, focus on precisely that point. Recent reforms to the NHS capital regime, some of which have been legislated for through the current Health and Care Bill, will further improve the system, including through better integration between the NHS, local government and care providers.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons), Shadow Minister (Scotland)

In an earlier answer, the Chancellor confirmed that the levelling-up fund round 2 bids would be some time in the spring. Many Members across the House want to engage in the process, as does Bridgend County Borough Council, which covers the majority of my Ogmore seat. However, it is difficult to plan if the Treasury will not confirm the date of the conclusion of the round 2 bidding process. May I press the Chancellor to tell us more than just spring next year, because spring does tend to be an awfully long time when the Treasury are making decisions?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

I am glad that there is widespread support for the levelling-up fund, and we are keen to work with all Members. I say spring because we want to ensure that we quickly learn the lessons from this round and incorporate them into future rounds. However, I assure the hon. Gentleman that our desire is to get on with this, because we want these projects to be delivered so that our communities can start to see the benefits as soon as possible.

Photo of Caroline Ansell Caroline Ansell Conservative, Eastbourne

I thank my right hon. Friend the Chancellor for £19.8 million from the levelling-up fund that will put Eastbourne on the map and really bill it as the gateway town to the South Downs national park. I also thank him for the investment that sits behind the kickstart scheme, which has so far delivered hundreds of new opportunities in my town. I promote the scheme everywhere I go, as I travel from north to south and east to west. Will the Minister join me in encouraging local businesses to step up ahead of the 17 December deadline to provide these golden opportunities for young people in my home town?

Photo of Lucy Frazer Lucy Frazer The Financial Secretary to the Treasury

I know that my hon. Friend will have campaigned hard for the funds that have come through. We will continue to support people across the House and in her constituency to level up.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Transport)

Rather than talk about competitive bids for funding, could we talk for a moment about mainstream council finances? We know that this Budget will significantly shift the burden to local authorities and require a significant rise in council tax, which people can ill afford. We also know that councils’ finances have not fully recovered and they have not been fully compensated. What is the Chancellor doing to talk to local councils about the pressures that they are facing?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

I actually did engage with representatives from local authorities in the run-up to the spending review. Last week’s spending review outlined an additional £1.6 billion a year of cash grant for local authorities, which will ensure that local government core spending power will rise at about 3% a year in real terms over the spending review period; that is historically high. It has been warmly welcomed by local councils up and down the country, and will ensure that council tax increases can be kept at more moderate levels.

Photo of Jo Gideon Jo Gideon Conservative, Stoke-on-Trent Central

I, too, thank my right hon. Friend for the £56 million for three innovative levelling-up bids in my home city of Stoke-on-Trent. We warmly welcome this as the biggest investment in Stoke-on-Trent for 50 years. However, investing in our social fabric and growing our local social infrastructure must be community-led to achieve the best results. Will he update this House on whether the shared prosperity fund will target grassroots community capacity-building investment in developing our social infrastructure rather than capital funding?

Photo of Helen Whately Helen Whately The Exchequer Secretary

I congratulate my hon. Friend and fellow Members representing Stoke-on-Trent on the £56 million their city was awarded in the first round of the levelling-up fund, winning not one but three bids to fund regeneration projects across the city, delivering new homes, community facilities, and office and hospitality space. She makes an important point about funding grassroots community capacity. I assure her that the UK shared prosperity fund, which is worth over £2.6 billion, will allocate funding across the UK. Further details of the fund will be set out later this year.

Photo of Rupa Huq Rupa Huq Labour, Ealing Central and Acton

The women-run Acton firm Fashionizer, which makes uniforms for hotels, diversified into mask manufacturing during the pandemic. The firm is now getting back on its feet, but the order book is just a third of what it was, so those working there ask the Chancellor if he could please extend the rate relief for the hospitality industry to those who supply hospitality, including food and laundry services, some of them exclusively. They have given me a few of their masks for you, Mr Speaker, for the Chancellor and for anyone who wants one. I think a few of the hon. Members on the back row of the Conservative Benches could do with them.

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

I commend those at the hon. Lady’s business for what they have done through the pandemic and beyond with the manufacture of masks. We have moved out of crisis phase now, so our interventions to support the economy are broader in scale, but I am confident that the measures we are taking to invest in infrastructure, innovation and skills will lead to economic growth and benefit her businesses, not just the one she mentioned.

Photo of Christian Wakeford Christian Wakeford Conservative, Bury South

I commend the Chancellor for his announcement in the Budget introducing a simplified system of duty that taxes alcoholic drinks according to their strength. Although this change will not come into force until 2023, it represents a welcome improvement, geared toward promoting public health. Does he agree that the proposed changes to our alcohol duty system will encourage manufacturers to innovate and promote lower strength drinks, which will help to reduce health harm associated with alcohol? Will he meet me to discuss alcohol harm?

Photo of Helen Whately Helen Whately The Exchequer Secretary

I sincerely agree with my hon. Friend and thank him for his support. We are overhauling the UK’s outdated alcohol duty rules—the biggest simplification for 140 years—and taking a common-sense approach. Drinks will be taxed in accordance with their strength, encouraging responsible drinking, tackling the problems caused by cheap high-strength drinks, and supporting our pubs and our hospitality sector.

Photo of Gavin Newlands Gavin Newlands Shadow SNP Spokesperson (Transport)

The Chancellor promised the aviation sector a bespoke support package before breaking his word. Instead these businesses will have to make use of other support schemes, including time to pay. What does he say to those businesses now hit by tens or hundreds of thousands of pounds in interest charges by HMRC when the sector is quite clearly still very badly affected by the pandemic?

Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

Obviously it would not be right for me to comment on the individual circumstances of any business, but HMRC’s time to pay service has supported tens of thousands of businesses through the crisis with flexible repayment periods. Similarly, the bounce back loan scheme introduced by my hon. Friend the Economic Secretary comes with a pay-as-you-go option to ensure that businesses can settle on a payment plan and stretch out repayment in a way that suits their cash flow.

Photo of Flick Drummond Flick Drummond Conservative, Meon Valley

My pubs and brewers are pleased with the reduction in beer duty, but may we have clarification on keg size, as my small brewers ship their beer in different sizes, including 20-litre pins? May we also have an indication of when the changes to the small brewers relief will be announced, ideally removing the 2,000-hectolitre limit and the cliff-edge at the 5,000-hectolitre limit?

Photo of Helen Whately Helen Whately The Exchequer Secretary

We are delighted that we are introducing the draft relief to support the on trade for people purchasing drinks in pubs and hospitality venues. We will consult on the details, including keg size. We will also bring forward the technical changes to small brewers relief, which my hon. Friend asks about.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

The pretence has to stop. The Budget was climate-illiterate, with just £7.8 billion of new money given to climate and nature mitigation to reach the 2024 target, when £62.9 billion is required. How will the Chancellor close that gap, or is the Prime Minister’s performance at COP26 simply a façade?

Photo of Simon Clarke Simon Clarke The Chief Secretary to the Treasury

The hon. Lady is not doing justice to what the Government have committed to. We have the £30 billion net zero strategy just the week before this fiscal event, and clearly we have had a number of announcements during COP already, including today’s on forests. That is clear evidence of how this Government are moving to ensure we double down on our international commitments and show the rest of the world the way to deliver on net zero.