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Mr. Brown:
I am grateful to my hon. Friend. Foreign direct investment in Britain from the rest of the world has been very high indeed. Of company headquarters located in Britain over the past 10 years, about 400 have been located from the rest of the world as regional or
world headquarters to Britain. In France, Germany and Ireland the figure is fewer than 100, so we have done well. Maintaining our rate of growth in exports is crucial, as is maintaining business investment at a high level. It is by these means that we will maintain and extend the industrial and services sector of the economy, and hopefully bring additional jobs to my hon. Friend’s constituency.
Mr. David Laws (Yeovil) (LD): Can the Chancellor tell us whether UK trade has been affected at all in recent years by the payment of bribes on defence orders? Can he give us an assurance that since the legislation banned bribes in 2002, there has been no Government connivance by any Department, including his own, in the payment of such bribes?
Mr. Brown: It was our legislation that banned something that had been a practice under previous Governments, and it was our party that led the way to making that change. On trade—I know the hon. Gentleman wants to know the figures illustrating the growth in trade—exports are growing by 6Â1/2 per cent. this year. We expect them to grow by 5Â1/4 to 5Â3/4 per cent. next year. That shows an economy that is far more balanced than in previous years.
Angela Eagle (Wallasey) (Lab): My right hon. Friend has already pointed out the crucial nature of achieving a positive end to the trade round in Doha, but as the American congressional mandate runs out in July, how optimistic is he that that great prize can be claimed?
Mr. Brown: I am grateful to my hon. Friend, who has taken an interest in both the trade deal and in what is happening as a result of trade to developing countries. I believe that there is still a window of opportunity for a trade deal. A meeting of all the major negotiators is to be held next Wednesday, and it is incumbent on all the major parties—that is, Europe, America, India and Brazil—to see what they can do in the next few days to move matters forward. The failure to reach a world trade deal will allow protectionist forces to grow, and I hope there will be all-party support for pushing forward with moves that will make possible a trade deal in the not too distant future.
Damian Green (Ashford) (Con): The Chancellor knows that one of the sectors in Britain that struggled most in world trade is manufacturing. When he took over, the manufacturing trade deficit was £7 billion. Last year it was £59 billion. It is hardly surprising that 1.25 million jobs in manufacturing have been lost in his 10 years at the Treasury. While he is in elegiac mode at the end of his term at the Treasury, can he explain whether that is a deliberate result of his policy, or whether it has been an accidental attack on British manufacturing, for which he would now like to apologise?
Mr. Brown: The hon. Gentleman is conveniently forgetting that in two recessions under the Conservative Government, not 1 million but 3 million manufacturing jobs were lost, and that manufacturing went down from 7 million to 4 million during the period of a Conservative Government. He also knows that in every advanced industrial country, a restructuring is taking place—in America, the rest of Europe and Japan—because there is a shift of manufacturing activity to China and Asia. He knows also that Asia is now out-producing Europe.
The question is which economies are going to adjust, modernise, reform and have modern manufacturing strength to enable them, if not to create additional jobs, to have additional wealth as a result of manufacturing industry. I believe that in aerospace and pharmaceuticals, in information and technology and the creative industries, and even in the modernisation of industries such as steel, we are showing that by high levels of investment—and now high levels of training, with apprenticeships and new people coming into these industries with skills—we can compete with the best in the world. I hope that there will be all-party support for building modern manufacturing strength.
Anne Snelgrove (South Swindon) (Lab): Nearly 40 top international companies have their UK headquarters in Swindon, thus creating an economic powerhouse in our part of the south-west. Does my right hon. Friend agree that in the week when it was reported by the World Bank that Russia was on track for high gross domestic product growth and China’s trade surplus with the EU was nearly £160 billion, it is absolutely vital that, as Prime Minister of this country, he continues his strong economic record and work with the global economy?
Mr. Brown: I am grateful for the work that my hon. Friend does to bring new jobs and new industry to Swindon. As a result of the policies that are being pursued, the growth rate in Swindon has been higher than in the economy as a whole. I can assure her that we will not follow the failed policies of the Conservative party. We will not allow interest rates to get out of control, we will not allow inflation to get out of control, and we will not cut public investment in universities, in the new deal or in apprenticeships, as the Conservatives threaten to do. We will ensure that we have balanced economic growth in this country.
Tax Burden
4. Mr. Philip Dunne (Ludlow) (Con): What assessment he has made of the change in the overall burden of taxation in the last 10 years; and if he will make a statement. [142564]
The Chief Secretary to the Treasury (Mr. Stephen Timms): This year’s Budget Red Book estimated that net taxes and national contributions were 37.2 per cent. of GDP in 2006-07. The Red Book also showed that that will stay below the peaks of the 1980s over the period ahead and well below the average for the EU 15.
Mr. Dunne: This Chancellor likes to remind the House of historical context. Will the Chief Secretary acknowledge that over the past 10 years the Chancellor has introduced more than 100 new stealth taxes, doubling the tax code, raising more than £40 billion in extra tax each year, costing every family more than £1,300 each, and making every taxpayer have to work a week longer to pay for it? Is not he the biggest tax-grabbing Chancellor in history?
Mr. Timms: I am glad to be able to refute all that. Let me remind the hon. Gentleman that the ratio that I mentioned was lower in the 1970s. In the 1980s, it rocketed, and for most of the 1980s it was at a higher level than it is now. His historical comparison is therefore entirely misplaced.
Mr. Denis MacShane (Rotherham) (Lab): Does the Chief Secretary agree that if there are 2.7 million more people in work and 700,000 new firms, all paying taxes, tax revenue will rise? Has not this Chancellor cut corporation tax and income tax to some of the lowest levels that we have seen in Britain and shown that 21st century socialism equals cutting taxes, and will he keep it up as Prime Minister?
Mr. Timms: My right hon. Friend is absolutely right. Not only are there more people in jobs and therefore paying taxes, but their earnings are up as well. Those are the results of economic success and the policies that my right hon. Friend the Chancellor has been pursuing over the past decade.
Adam Afriyie (Windsor) (Con): A recent YouGov poll said that the majority of Labour party members would like a higher tax band for higher rate taxpayers. Does the Minister agree with them, or does he think that they are wrong?
Mr. Timms: I can reassure the hon. Gentleman that the UK remains lightly taxed by international comparison. We are determined to maintain the approach that we have taken. It would have been helpful if he and his hon. Friends had been more supportive in the Finance Bill Committee of the measures that we have been taking to tackle tax avoidance, because that would have been a valuable step. What is true is that we have taken steps to put right chronic underinvestment in public services and will continue to do so.
Mr. John Grogan (Selby) (Lab): On the balance of taxation, does my right hon. Friend agree with Nicholas Ferguson, chairman of private equity firm SVG Capital, who recently said that highly paid private equity executives paying less tax than a cleaning lady could not be right? Has he any measures in mind to assuage Nicholas Ferguson’s conscience—possibly raising the effective 10 per cent. rate that many partners in private equity firms currently pay?
Mr. Timms: I have seen the recent debate about the matter in the newspapers. My hon. Friend knows that we had a review on the subject in March, well before the recent public debate, and we await its outcome.
Mr. David Gauke (South-West Hertfordshire) (Con): In 1997, the UK’s tax burden was lower than Germany’s by 6 per cent. of GDP. Ten years later, that competitive advantage has been lost as our tax burden overtakes Germany’s. That reflects a trend of Organisation for Economic Co-operation and Development countries cutting their tax burden while ours has increased. Given the economic challenges of the 21st century, will the Chief Secretary explain whether that helps or hinders the UK’s long-term competitiveness?
Mr. Timms:
Let me begin by welcoming the hon. Gentleman to the Front Bench. The OECD comparison makes it clear that the UK remains a lightly taxed economy internationally. Enterprise and competitiveness in the UK have benefited hugely from the unprecedented decade of stability in the economy that we have just experienced. That is why the UK enjoyed more foreign direct investment last year than any other country in the
world—certainly more than Germany. A brief examination of the economic record of this country and that of Germany in the past decade shows that ours is a great deal stronger.
Rob Marris (Wolverhampton, South-West) (Lab): My right hon. Friend referred to the Finance Bill Committee. I have served on six of the last seven Finance Bill Committees— [Interruption.] As a volunteer. Does my right hon. Friend share my experience that, in those Committees, the Conservative Opposition often made proposals to featherbed the rich and preserve their tax loopholes such as that of family trusts?
Mr. Timms: My hon. Friend served with distinction on all those Finance Bill Committees. He is right about the approach that Opposition Members have taken far too often.
No. 11 Downing Street
5. Mr. David Jones (Clwyd, West) (Con): What procedures are in place to ensure that additional costs associated with holding events at No. 11 Downing street are met by the organisers of those events. [142565]
The Chief Secretary to the Treasury (Mr. Stephen Timms): Every external organisation that uses No. 11 Downing street is required to meet in full the additional costs associated with holding the event.
Mr. Jones: Given that the householder is in the Chamber, one might think that he would want to answer for himself. However, perhaps the Chief Secretary can assist the House. We know that the Smith Institute has enjoyed the Chancellor’s hospitality on no fewer than 160 occasions in the past 10 years. Of the other 66 charities that used No. 11 in that time, which used it most often and on how many occasions?
Mr. Timms: The hon. Gentleman’s question was about the extent to which organisations had met the costs. As I said in my initial answer, the organisations pay all those additional costs. The 67 to which he refers on the Treasury website contract directly for catering and equipment. It is a similar arrangement to the one that applies in the Jubilee Room, with which hon. Members are familiar. It operates without difficulty.
Barbara Keeley (Worsley) (Lab): This is carers week, the highlight of which for carers, young carers and the seven carers organisations that support them was being invited to a reception at No. 11 Downing street, which the Chancellor hosted yesterday. Given the contribution that carers make to the health and social care of this country, does my right hon. Friend agree that, in carers week, that was a most appropriate way in which to recognise what they give to this country?
Mr. Timms: My hon. Friend is right. My right hon. Friend the Chancellor appreciated the opportunity to address the carers who attended the reception. In every community throughout the country, carers do a fantastic job. The Government should congratulate and thank their representatives, as that reception made possible.
Sir Peter Tapsell (Louth and Horncastle) (Con): As one of the most costly events to the taxpayer held at No. 11 during the Chancellor’s time there must undoubtedly have been that at which it was decided to sell half of Britain’s gold reserves at rock-bottom prices, will the Chief Secretary inquire of his shy right hon. Friend whether he will be taking his cross of gold with him to No. 10 or will he leave it behind as a grim relic of disaster for his successor?
Mr. Timms: Let me give the hon. Gentleman a little reassurance that the European Central Bank was not one of the 67 charities that has used No. 11 Downing street over the past 10 years.
David Taylor (North-West Leicestershire) (Lab/Co-op): Will my right hon. Friend confirm that one of the most expensive events at No. 11 Downing street in recent years was on 16 September 1992, when the then Chancellor lay in a bath singing French popular songs, with future Leaders of the Opposition dancing in attendance? Will he confirm that the cost of that event to the British taxpayer was a minimum of £4,000 million? Was an invoice ever sent to Conservative party headquarters?
Mr. Timms: I think that my hon. Friend’s calculation is absolutely right. Sadly, the cost of that event was never refunded to the Exchequer and, also sadly, I fear that no Labour Member was present to see it.
Mr. Mark Hoban (Fareham) (Con): Will the Chief Secretary confirm that the Treasury paid more than £11,000 for two seminars organised for its trustees by the Smith Institute, which was a donor to the Chancellor’s leadership campaign? Will he also confirm that it was only two years later, when the Charity Commission started asking questions, that the Treasury noticed that mistake? Will he now guarantee that all direct and indirect support for the Smith Institute from the Government has been properly declared and is in the public domain?
Mr. Timms: There has been no direct financial support or contribution to the Smith Institute from any Department of Government. I have one confession to make on this topic, however, which may be of interest to the hon. Gentleman. At the No. 11 children’s Christmas party this year, organised with the Booktrust charity, it paid for the invitations, the Christmas decorations and the food and drink—but it is true that the Treasury paid for the Christmas tree.
Banking Services
6. Mary Creagh (Wakefield) (Lab): What steps he is taking to ensure that people in receipt of benefits have access to high quality banking services. [142566]
The Economic Secretary to the Treasury (Ed Balls):
The Government’s goal is for everyone to be able to manage their money effectively and securely through a transactional bank account. Since the move to direct payment started in 2003, 98 per cent. of Department for Work and Pensions benefits are now paid into accounts, which is up from 28 per cent. in 1997. Of those paid into accounts, 79 per cent. are paid directly
into a bank account, including a basic bank account and 19 per cent. into a Post Office card account—only 2 per cent. of payments are made by cheque.
Mary Creagh: I thank my hon. Friend for that reply. I have been contacted twice by a constituent whose benefits are paid directly into his account, but they have been paid late twice and he has been penalised by the bank for going overdrawn. Will my hon. Friend work with the Department for Work and Pensions to ensure that benefits are paid correctly and on time all the time? Does he share my abhorrence at the banks, which make millions in profits, skimming them off from the poorest members of our society when they go overdrawn, often through no fault of their own?
Ed Balls: I know from our conversations that that is a particularly sad case and I am happy to take up the details with my hon. Friend and make contact with my DWP colleagues. Of the 680 million payments made by the DWP in 2006, only 21,000—0.0003 per cent.—were reported as either late or missing. In the minority of cases where that does happen, the DWP, if found to be in error, refunds in full any penalty charges that may result to the individual concerned. I also agree with my hon. Friend that when the banks are presented with the facts of this sort of case, they should act in a sensitive manner with respect to those individuals.
Mr. Colin Breed (South-East Cornwall) (LD): It seems clear that the big banks are not really interested in providing basic accounts. Is it therefore time to consider an enhanced role for the credit unions, or even the creation of a community banking network similar to that in the United States and in Europe, to provide that kind of banking service?
Ed Balls: I do not think it fair to say that the banks are not interested. Since 2004, we have reduced the number of adults without a bank account from 2.8 million to 2 million. Part of the reason that we have been able to do that is the growth in the number of basic bank accounts being offered by the banks to lower income customers. The hon. Gentleman is absolutely right, however, that if we are to meet our goal of getting everybody a bank account, we need to do more, and to do it in new ways. That is why we are encouraging credit unions, in particular, to move into the current account banking market. There are now nine credit unions offering current accounts, including the White Rose credit union in Wakefield, the constituency of my hon. Friend the Member for Wakefield (Mary Creagh). We want to see more of that. We are also working with the banks to ensure that they help us to spread current account banking to more credit unions. That could be an effective way of spreading the habit of banking to the 2 million people in this country who still do not have a bank account.
Mr. Mark Todd (South Derbyshire) (Lab): One of the critical needs that everyone has is the ability to gain access to the money in their bank account free of charge. Following the initiative of the Treasury Committee in proposing an extension of free access cash machines to areas that currently lack them, I have proposed two in my constituency, in Midway and Hartshorne. Will the Minister tell us what progress has been made in extending the network of free access cash machines?
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