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House of Commons

Thursday 28 February 2002

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]

City of London (Ward Elections) Bill

Order for further consideration, as amended, read.

To be considered on Thursday 7 March.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

EU Growth and Stability Pact

1. Mr. Wayne David (Caerphilly): If he will make a statement on the operation of the EU growth and stability pact. [35742]

The Chancellor of the Exchequer (Mr. Gordon Brown): With your permission, Mr. Speaker, I request to answer that question at the end of Question Time, so that we may have a fuller debate on it.

Stamp Duty

2. Shona McIsaac (Cleethorpes): If he will make a statement on stamp duty exemptions. [35743]

The Chancellor of the Exchequer (Mr. Gordon Brown): New investment, new businesses and new jobs are the key to regenerating our high unemployment communities. In the pre-Budget report is a special measure to help the slowest growing and highest unemployment areas of Britain. The Government have abolished stamp duty in 2,000 wards in constituencies throughout the country, for all transactions for homes and business properties worth up to £150,000, leading in the first three months to 5,000 claims for purchases worth £450 million—an average saving of £900 per transaction. As my hon. Friend is aware, the qualifying areas include two wards in her constituency. In the Budget I propose to legislate so that we can take more business property transactions out of stamp duty in these areas.

Shona McIsaac: I thank my right hon. Friend for that reply. The measures certainly have been welcome in the two wards in my constituency and the three wards in neighbouring Grimsby. I welcome my right hon. Friend's statement that he will extend these welcome exemptions, but will he also consider including more of the deprived

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wards in that exemption? Residents in the neighbouring wards to the two in my constituency would certainly like to benefit from these measures as well.

Mr. Brown: The definition that has been used for choosing the wards is that they are the 15 per cent. most deprived wards in the country, and that has led to the choice that we have made, based on the most up-to-date information. My hon. Friend has welcomed our plans to extend that scheme involving business properties, and I hope that they will be welcomed on both sides of the House. What we are proposing here is a move from the old strategy, which was either providing girocheques to people who were unemployed or providing only property subsidies. The stamp duty exemptions go side by side with changes in policy to reduce VAT for conversions in high streets, for transferring businesses into houses; the community investment tax credit, which we are introducing in the Budget; and the community investment fund. All these measures are designed to help the creation of small businesses and the development of economic activity in communities that have hitherto been high unemployment communities.

Mr. Roger Williams (Brecon and Radnorshire): Have the United Kingdom Government made a state aid notification on stamp duty exemptions to the European Commission, and if so, what response has the Commission made?

Mr. Brown: We believe that our proposals will be acceptable to the Commission. We will go ahead with our proposals on that basis. I will announce further proposals in the Budget on that basis. The hon. Gentleman should be particularly pleased, because 42 per cent. of areas in Wales qualify under our proposals. I emphasise that the help that is available now to start small businesses in those areas, including advice and help from the Small Business Service in England and the relevant services in Scotland and Wales, should enable us to bridge the gap whereby, in Britain, only half as many small businesses are created as in America, and only one small business is created in the poorest areas for every six created in the richest areas. Therefore we will go ahead with our proposals.

Mr. Dennis Skinner (Bolsover): Is the Chancellor aware that, welcome though it is that there has been a 1 million cut in unemployment and that we have the highest level of employment throughout the country, he is right to concentrate on those areas that need to be revitalised after the massive attacks—pit closures, textile closures and so on? Will he therefore bear it in mind that the new £24 million development in Shirebrook in the north Derbyshire area is important, as is junction 29A, which will revitalise three constituencies in north Derbyshire? Will my right hon. Friend, together with what he is about to announce today, ensure that that type of programme continues, because there will be not only economic benefit but electoral benefit from acting in this fashion?

Mr. Brown: Our policies for both stability and economic regeneration have led to the creation of

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1.3 million more jobs in this country over the last five years. At the same time we have the lowest inflation and the lowest long-term interest rates for 40 years.

I should have thought that among the Conservatives there would be at least one Member wishing to intervene to thank us for introducing these measures because the shadow Chancellor has four wards in his constituency that are benefiting from the stamp duty exemption, and that is one of the reasons why we have cut unemployment in his constituency by 50 per cent. over the last five years. It is about time that the Conservatives abandoned their policy to get rid of the new deal and supported our policies for both stability and prosperity.

Management Costs

3. Mrs. Patsy Calton (Cheadle): What studies his Department has undertaken of the management costs of (a) PPPs and (b) conventionally procured public sector projects. [35744]

The Chief Secretary to the Treasury (Mr. Andrew Smith): Studies have focused on overall value for money rather than the specific components to which the hon. Lady refers. National Audit Office reports have shown, of course, that that value for money is being achieved. Management costs in private finance initiative projects do of course cover items like whole-life maintenance, which are not typically provided for in conventional procurement.

Mrs. Calton: My question is about the cost of monitoring London Underground's public-private partnership. Transport for London has argued that the attribution process for London Underground's PPP is so complex and bureaucratic as to be practically unworkable. Given the Treasury's intimate involvement with London Underground's PPP, what estimate has the Treasury made of the cost of monitoring the 1,000 service disruptions and 350 facilities faults a week? Is the Chancellor aware that London Underground will have to monitor the performance of the infracos down to the amount of time it takes to fix a light bulb? How many people—

Mr. Speaker: Order. The hon. Lady's question is far too long.

Mr. Smith: As was committed by the Department for Transport, Local Government and the Regions, the House regularly receives reports on the costs of the consultancy involved in carrying forward London Underground's PPP. If we are talking about value for money, as we must, and the much-needed modernisation of the London underground, let us not forget that the PPP involves £16 billion of investment during the first 15 years of the project—the equivalent of six Jubilee lines will be constructed—and it is £2 billion cheaper than the public sector comparator. That is much-needed investment for London. London Underground remains responsible for the trains, ticketing, stations and has overall responsibility for safety, while we give world-leading companies the responsibility of carrying out that much-needed investment to world-class standards. Let us get on with it.

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Ross Cranston (Dudley, North): In addition to comparative costs, capital costs, economic efficiencies and so on, do not we also have to taken into account the Keynesian aphorism:

In Dudley, we would be on a waiting list for a new hospital; as a result of the PFI, we are getting a new hospital now.

Mr. Smith: My hon. and learned Friend makes a very good point. The crucial thing is not only that the PFI and the PPP are bringing forward much-needed investment, but, with this Government, that investment is additional to conventional public sector investment, whereas the Conservative party used it as an excuse to cut public investment.

Miss Anne McIntosh (Vale of York): If the Treasury is so proud of its PPP programme for London Underground, why was a Treasury Minister not sent to the inquiry into that very subject of the Transport Sub-Committee of the Select Committee on Transport, Local Government and the Regions? Have the Government got something to hide?

Mr. Smith: There is a well established precedent that we do, of course, attend Select Committees, including the Transport Sub-Committee, when the matters under consideration are the lead responsibility of the Treasury. The DTLR has lead responsibility for the items discussed in the case to which the hon. Lady refers. My right hon. Friend the Secretary of State made a very good report to the Committee.

Mr. Tom Harris (Glasgow, Cathcart): Is my right hon. Friend aware of a very successful—in fact, an award wining—PPP in Glasgow under which 10 of the city's secondary schools have been completely rebuilt and a further 19 have been refurbished? Can he tell the House what plans the Government will put in place to safeguard the security of tenure and the wages and conditions of those employees who move from local authority employment to that of private companies?

Mr. Smith: I join my hon. Friend in congratulating those responsible for introducing such a radical improvement to the school facilities available to young people in Glasgow. Those schools are among the 500 throughout Britain that are benefiting from PFI investment. On the important point that he makes about staff, not only will the Government act, but we have already acted to improve the pension protections for staff in guaranteeing the application of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and in mandating consultation with the staff involved. That will continue to be the case.

Mr. Edward Davey (Kingston and Surbiton): Is the Chief Secretary aware that the draft contracts for London Underground's PPP contain absolutely no provision for terminating the contract if an infraco fails during the first seven and a half years? Is he happy to have no termination rights in that draft contract?

Mr. Smith: I am satisfied that, as I said earlier, the PPP represents best value for money. It enables us to mobilise

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world-leading engineering expertise satisfactorily, as it must be to complete the much-needed investment in the London underground. The people of London will be very interested that the Liberal Democrats want to carry on scoring political points about that, whereas we want to get on with the investment.

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