Previous Section Index Home Page

Does the Minister agree that there is absolutely nothing that she can do about that, unless she proposes to interfere in the markets?

Jane Kennedy: The hon. Gentleman is right about what has been said and what was said yesterday. I understand that that was largely because it was expected that there would not be an increase in production. However, an open economy such as the UK’s is inevitably affected by global developments, including those in global food and energy prices.

Overall, UK inflation is lower than that in the US and the euro area and is the second lowest among all 27 European Union countries. Although we are going through a period of difficulty, it would be of benefit to all if more were made of the demonstrable underlying strength of the economy, rather than there being the celebration of the problems that we sometimes hear from Conservative Members.

Mr. Dennis Skinner (Bolsover) (Lab): Does my right hon. Friend agree that the issue is not only about production? The argument used to be about the Organisation of Petroleum Exporting Countries and its failure to increase production, and that still applies. However, that is added to by massive speculation. If America, that bastion of capitalism, can set up a Senate Committee to look into the speculation that is shoving oil prices, along with food prices, through the roof, surely it is time that we led a campaign in the international gatherings—at the G8 and among Finance Ministers—to put a stop to that massive speculation, which is hitting many people around the world.

Jane Kennedy: My hon. Friend has made his point as only he can; it is a pleasure to see him in his seat. My right hon. Friend the Chancellor will take the advice that my hon. Friend has given the House with him when he attends the next meeting of the G7, which is in Japan in two weeks’ time.

Mr. Alan Reid (Argyll and Bute) (LD): The recent rises in fuel prices have caused an economic crisis on our islands and remote parts of the mainland, particularly the Kintyre peninsula. I thank the Exchequer Secretary for our constructive meeting yesterday. However, will the Government examine the evidence presented and consider the problems that the high price of fuel is causing remote rural communities? Will they look at the rural fuel discount schemes that operate in other countries and seriously consider introducing a scheme for a lower rate of fuel duty for
5 Jun 2008 : Column 914
islands and remote communities? Such help is needed for the struggling economies of those parts of the country.

Jane Kennedy: I am grateful to the hon. Gentleman for the acknowledgement of the meeting that he had yesterday with my hon. Friend the Exchequer Secretary. She has indicated to him how willing she is to look at the evidence, and I am sure that he will bring that evidence forward and that she and her officials will give it some consideration.

Nick Ainger (Carmarthen, West and South Pembrokeshire) (Lab): Will my right hon. Friend have discussions with the oil companies about extending or creating a social tariff for heating oil and for domestic liquefied petroleum gas and liquefied natural gas? Although it is right that the energy companies now have a significantly increased social tariff for domestic gas and electricity users, many people in rural areas whose only source of heating is heating oil or LPG have no social tariff available to them. Will my right hon. Friend tackle that problem?

Jane Kennedy: My hon. Friend may know that my right hon. Friend the Chancellor has already indicated that that is a good idea that he would like to consider, so my hon. Friend’s suggestion is welcome. However, it is worth reminding the House that the volatility of inflation since 1997 has been just a quarter of what it was in the two decades before 1997, underlying the case that we are able to make for the strength of the British economy in being able to deal with the challenges in the weeks that lie ahead.

Stewart Hosie (Dundee, East) (SNP): In terms of the impact of high fuel prices, not only remote rural areas and island communities—in the northern isles, where prices are at £6.50 a gallon, people are questioning whether it is worth going to work—but economic sectors all over the UK, not least the haulage industry, are being hit hard. Does the Minister agree that the right thing to do in principle would be to introduce a fuel duty regulator to smooth out unexpected spikes in pricing? Does she further agree that the only tool that the Chancellor has—either to apply or postpone routine increases in duty—is now a totally inadequate response to the massive spikes in fuel price rises?

Jane Kennedy: The hon. Gentleman makes an interesting proposal that has been considered, but there are concerns that it would actually increase the volatility of fuel prices. It is wrong to suggest that we have only one tool. My hon. Friend the Minister for Energy recently attended the 11th ministerial meeting of the International Energy Forum, securing an ambitious programme of further work on improving market transparency and removing barriers to investment in new oil supplies. As I said, my right hon. Friend the Chancellor will make this a high priority for British input into the G7 summit in two weeks’ time. This is an international problem—it is not only being experienced here in the UK—and the most effective response will be a global one from economies throughout the G7.

5 Jun 2008 : Column 915

Mr. Speaker: We now come to topical questions. Could I ask that when hon. Members ask a topical question it is brief and not an opportunity to make a speech?

Topical Questions

T1. [208587] Mr. Adam Holloway (Gravesham) (Con): If he will make a statement on his departmental responsibilities.

The Chancellor of the Exchequer (Mr. Alistair Darling): The core purpose of the Treasury remains to ensure the stability of the economy and to promote growth, as well to manage the public services and finances.

Mr. Holloway: From next year, Her Majesty’s Revenue and Customs will be able to show up at someone’s office or workplace, at their accountants or their bank and demand information about them. Can the Chancellor outline what benefits there will be from those massively increased powers?

The Financial Secretary to the Treasury (Jane Kennedy): HMRC has been undertaking a review of its powers because it was widely recognised that there were very strong powers in some areas of the tax code and much more limited powers in other areas where there was unevenness and inequity in the way in which they were exercised. We will scrutinise the powers that we propose to reform, including, I assume, in the debate that we will have later today in the Finance Bill Committee upstairs. There will be a reining back of some of those powers and a greater transparency about how they are applied. I hope that the hon. Gentleman will be reassured if I tell him that there will be many more safeguards for taxpayers—rights of appeal and so on—in the way that the powers are applied. I am listening closely to representations that are being made by taxation advisers and others in the field as we take this review forward.

T3. [208589] Nia Griffith (Llanelli) (Lab): Many of my constituents are worried about the rising cost of food in their shopping baskets, but even more concerned about the major rise in food prices worldwide and the potentially devastating effects on many people in poorer countries. Will my right hon. Friend the Chancellor tell me what action he is taking to tackle this crisis in rising global food prices?

Mr. Darling: We will raise that issue at the G7 meeting in Japan in 10 days’ time. It is important that countries throughout the world act to deal with some of the problems that are causing high food prices. For example, we in Europe need to face up to the impact that the common agricultural policy is having on food prices or the very high import tariffs that we impose in some cases. We also need to look at whether the current biofuels policy is distorting the market. It cannot be right that corn that could be used for food purposes is used to be put into petrol tanks. Sustainable biofuels can be used, and we need to make sure that we use them, but we also have to ensure that import and export barriers that countries have are broken down, which is why it is important that we get a trade deal as quickly as possible. We need to look at the barriers that are preventing farmers, either here or in developing
5 Jun 2008 : Column 916
countries, from planting the crops that we need. That is a huge problem for developed and developing countries alike, and it demands international action. We want to make sure that it is properly discussed and that action follows from the meeting in 10 days’ time.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): Does the Chancellor agree with us and the Treasury Committee that the person appointed to the post of deputy governor of the Bank of England should be someone with direct financial markets experience?

Mr. Darling: We will make an announcement shortly, but I say to the hon. Gentleman that I hope that we get all-party agreement on the matter. Part of the changes that I want to make to the Bank of England is to restructure it so that one of its core purposes is the maintenance of financial stability. We should learn from the example of the Monetary Policy Committee, and take a similar approach to financial stability, bringing in outside expertise to advise the Governor and the appropriate deputy governor.

I agree with the hon. Gentleman that it is crucial that the Bank of England, which does not have such a responsibility at the moment, has a statutory responsibility to ensure that the viability of the financial system is at the front of everything that it does. It is important that we get that reform through; it is also important that we appoint the right person to be the deputy governor. I will ensure that that happens.

T4. [208590] Andrew Mackinlay (Thurrock) (Lab): When the Home Office and the Foreign Office contemplate granting political asylum to these extraordinarily clever people who come to this country from the former Soviet Union not with millions, but with billions, what involvement does the Chancellor’s Department, or departments for which he has responsibility, have in commenting on the veracity, honesty and integrity of people who have, frankly, ripped off their countries and rushed to the west?

Mr. Darling: I am not aware of being routinely asked for advice on such matters. Of course, the Treasury, if asked by either the Home Office or Foreign Office for its comments, would be happy to give them.

T5. [208592] Tony Baldry (Banbury) (Con): Is the Treasury going to find the money to ensure that our armed forces are paid and housed decently, or are the Government simply going to ignore today’s advice from Sir Richard Dannatt?

Mr. Darling: As the hon. Gentleman will know, we have increased spending on defence over the last few years, which contrasts with what happened in the 1980s and 1990s. In the settlement made with the Ministry of Defence last year, we have also made additional funds available for the refurbishment of Army homes. I agree with the hon. Gentleman: it is important that we provide decent homes for people who are serving their country so well.

I understand that the Chief of General Staff raised the issue of pay in an interview in one of this morning’s newspapers. We implemented the independent pay
5 Jun 2008 : Column 917
review recommendations last year, and some soldiers in the junior ranks got an increase in their pay way above inflation. We will continue to do whatever we can to support the armed forces that serve this country so well, but I can tell the hon. Gentleman and the House that we have been increasing the amount going to the MOD for some time now.

T6. [208593] Shona McIsaac (Cleethorpes) (Lab): People on low incomes are worried sick about being able to pay their gas and electricity bills. The energy companies, which rake in huge profits, have introduced social tariffs, but I am worried that few people know about them, so they do not get the limited help available. What discussions will be held with energy companies and others to ensure that people get all the help that is there for them?

Mr. Darling: I agree with my hon. Friend that people face increased pressure because of increased gas and electricity bills. That is why we reached an agreement with the power companies earlier this year. Among other things, it will ensure that people do not pay so much on the pre-payment meters. It always seemed wrong to me to ask people on low incomes to pay more than those on high incomes. It was unnecessary and should be sorted out, as it will be. As part of that, we have agreed to ensure that people get proper advice to try to get them on the lowest appropriate tariff as well as, of course, proper advice on and provision of, for example, insulation, to cut down on the amount of energy that people need to use in the first place. We are doing a range of things, but I agree with my hon. Friend that we must ensure that people know what they are entitled to so that they can get the benefit of it.

T8. [208595] Jo Swinson (East Dunbartonshire) (LD): With the soaring cost of fuel, the current 40p tax-free mileage allowance does not cover the cost of running a car for many key workers in our economy, including small business owners and community nurses. Will the Chancellor review the rate?

The Exchequer Secretary to the Treasury (Angela Eagle): We always keep those rates under review. The hon. Lady should also remember that the mileage rates are not meant to compensate for all the costs of running a car.

T7. [208594] Mr. Stephen Hepburn (Jarrow) (Lab): May I draw Ministers’ attention to the Public Accounts Committee report, which stated that relocating 10,000 Government jobs from London to the north-east would mean a saving of £78 million a year? What progress has been made on the Lyons proposals, which the Government fully endorsed and which advocated the transfer of 20,000 jobs?

Jane Kennedy: I am grateful to my hon. Friend for giving me notice of the question. Since 2004, we have succeeded in relocating 15,700 staff out of London and the south-east. We are determined to maintain the momentum and I am confident that further posts will move to the north and north-east. Indeed, I understand that, in the past few days, Her Majesty’s Revenue and Customs has confirmed a further 95 jobs in the Washington cluster of offices. I hope that my hon. Friend is reassured that we are maintaining the pressure and the momentum.

5 Jun 2008 : Column 918

T9. [208596] Simon Hughes (North Southwark and Bermondsey) (LD): Is it still Government policy to reduce the gap between the richest 10 per cent. and the poorest 10 per cent. in this country? If so, when will that be delivered?

Mr. Darling: If the hon. Gentleman cares to examine what we have done in the past 10 or 11 years, he will realise that we have hugely increased people’s incomes, especially those of people on lower incomes. I strongly believe that it is right to ensure that there is a fair tax system and that people are rewarded for their work. It will always remain a central purpose—a part of what we are about—to ensure that people on lower and middle incomes see the reward for what they have done and to continue to do everything that we can to take children and pensioners out of poverty.

Mr. George Mudie (Leeds, East) (Lab): Following the Bank of England’s indifferent performance on Northern Rock, may I strongly endorse the earlier suggestion that the Chancellor stay firm in support of appointing a more City and market-oriented individual to the deputy governor’s post instead of the cosy but wrong alternative of an in-house promotion?

Mr. Darling: I do not think that I can add much to what I said to the shadow Chief Secretary. I will make a decision in the not-too-distant future, but it is important that we keep sight of the fact that, although the appointee is important, it is also important to make the necessary changes to strengthen the Bank of England’s ability—and responsibility—to deal with the stability of the financial system as a whole.

Mr. Mark Harper (Forest of Dean) (Con): If an ordinary family in my constituency who drive, say, a Ford Mondeo face a 30 per cent. rise in their car tax over the next three years and the consequent damage to its resale value, can the Chancellor explain by what mechanism that improves the environment?

Angela Eagle: Many Ford Mondeos will see a freeze or a fall in their vehicle excise duty. Perhaps the hon. Gentleman should recognise that some people will gain from the changes.

Mr. Siôn Simon (Birmingham, Erdington) (Lab): Will the Chancellor consider liberalising the regulation of non-standard forms of consumer credit? In the current climate, it is impossible for low-income families to secure mainstream consumer credit. We do not want them to go to loan sharks or dodgy credit providers, but the current regulatory framework makes it difficult for non-standard providers to offer consumer credit to families.

The Economic Secretary to the Treasury (Kitty Ussher): I am grateful to my hon. Friend for that question. He will have heard in earlier exchanges this morning about the important role that institutions such as credit unions can provide in, I hope, one day crowding out the legal but extortionate credit providers. Obviously loan sharks operate in the illegal sphere. My colleagues in the Department for Business, Enterprise and Regulatory Reform have already made significant progress in tightening up the regulations in that area. If there are
5 Jun 2008 : Column 919
other issues that my hon. Friend feels that we should look into, I should be happy to discuss them with him personally.

Sir Patrick Cormack (South Staffordshire) (Con): Will the Chancellor now come to the Dispatch Box and acknowledge the disproportionate impact that the increase in vehicle excise duty will have in rural areas?

Angela Eagle: Again, it depends on the cars being driven. There is no obvious reason why there should be a disproportionate impact in rural areas, as opposed to urban areas. The idea behind the changes is to encourage people to move to cleaner, less polluting cars. The Conservative “Quality of Life” report proposed putting the idea into effect in a much more draconian way than we are suggesting, yet now the Conservatives vote against it and do not support it.

John McFall (West Dunbartonshire) (Lab/Co-op): The Chancellor will know that Rachel Lomax, the
5 Jun 2008 : Column 920
deputy governor of the Bank of England who is retiring, has done an excellent job in charge of monetary policy. I urge the Chancellor not to box himself in, but to take the recommendations of the Treasury Committee and consider a management reorganisation at the deputy governor level, so that we can elevate financial stability to the important position that it should have?

Mr. Darling: I have tried over the past 20 minutes precisely not to box myself in, for obvious reasons. I do not normally discuss individuals on the Floor of the House, but Rachel Lomax has served the Bank well. She has also served successive Governments well, as a loyal, distinguished and hard-working civil servant. I know from my experience as Secretary of State for Social Security and then for Work and Pensions and as Secretary of State for Transport that Rachel Lomax was an excellent permanent secretary. Whatever she does in the future, I hope that the whole House will wish her well.

Next Section Index Home Page