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30 Oct 2008 : Column 1025

The Exchequer Secretary to the Treasury (Angela Eagle): The changes to vehicle excise duty were set out in Budget 2008, and they are scheduled to be legislated on in the Finance Bill in 2009.

Tim Loughton: In West Sussex, during half-term week, the traffic levels on the A27 typically fall by about 20 per cent., due to the absence of the school run. This is related to the impracticalities of public transport, and is happening despite the fact that we are encouraging car sharing, which typically requires larger cars. Worthing also has a disproportionate number of elderly and disabled constituents who require larger cars for their mobility equipment. How does the Minister suggest that those constituents change their driving behaviour, given that they are to be faced with the treble whammy of swingeing increases in vehicle excise duty, plummeting second-hand car sale values, and no money being available to buy new, environmentally friendly cars?

Angela Eagle: It is important to remember that 55 per cent. of motorists in graduated VED will be better off, or no worse off, under these proposals. There are family cars and larger cars at or under the 160 g/km emissions level, below which the motorist will be either better off or no worse off.

Stephen Hesford (Wirral, West) (Lab): On the cost of motoring, has my hon. Friend made an assessment of the policy of a fuel duty escalator? If so, does she agree that it would be a ridiculous misjudgment to implement such a policy?

Angela Eagle: Under a policy of fuel duty stabilisers, we would now be putting an extra 5p a litre on fuel duty. That would directly affect prices at the pump, which would affect the cost of motoring far more than VED.

Justine Greening (Putney) (Con): The Government’s planned unfair road tax rises will bring in £1.8 billion over the next two years. That is money that families could have done with in their own pockets, rather than the Government’s. Are the Government not making a difficult situation worse for those families? The reality is that Ministers should ditch this road tax rise. It does not support families; it does not support the economy; and it does not even support the environment.

Angela Eagle: Why is the hon. Lady talking about that, when her policy would put 5p on fuel duty now, creating an increase that would feed right through to the pumps? That is bad judgment.


8. Jeff Ennis (Barnsley, East and Mexborough) (Lab): If he will reduce the rate of value added tax on membership fees for health clubs and gymnasiums. [231521]

The Financial Secretary to the Treasury (Mr. Stephen Timms): No. The Government do not think that this change would provide well-targeted, cost-effective support for their objectives. That view was supported by the 2004 Wanless report “Securing Good Health for the
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Whole Population”, which argued that it would be ineffective and unfair. However, we keep these matters under review.

Jeff Ennis: I know that my constituent Mr. Ian Williams, who runs the Empress health club in Mexborough in my constituency, will be disappointed with that response. The health club is excellent and has full boxing facilities for Mexborough boxing club. It ticks all the right boxes as far as the Government are concerned in terms of health, well-being and community cohesion, and yet Mr. Williams is finding it increasingly difficult to compete with Denaby sports centre down the road, a local authority trust facility which is VAT exempt. Given my right hon. Friend’s response, will he look at the issue again? If he is not willing to do so, will he give me any other financial advice that I can offer to Mr. Williams, because this facility will close if we cannot get additional help to it?

Mr. Timms: I am aware of concerns about competition with regard to leisure centres. HMRC has discussed that with some of those involved, but of course I would be happy to talk to my hon. Friend about it. It may well be that the help that we have talked about today for small businesses will be valuable in that particular case.

Counterfeit Currency

9. Mr. Christopher Chope (Christchurch) (Con): What estimate he has made of the number of counterfeit pound coins in circulation; and what steps he is taking to remove them from circulation. [231522]

The Economic Secretary to the Treasury (Ian Pearson): The latest survey conducted by the Royal Mint indicated a potential counterfeit level of around 2 per cent. The Royal Mint continues to work closely with the police, banks and cash-in-transit companies to introduce more robust methods for detecting and removing counterfeit coins from circulation.

Mr. Chope: Is not the biggest scandal not the number of counterfeit coins but the fact that each of these counterfeit pounds in the pocket is worth 14 per cent. less than they were at the time of the last general election? Is not that 14 per cent. devaluation of the pound a tragedy for our country and a reflection of the failure of this Government’s economic policies?

Ian Pearson: The hon. Gentleman is imaginative in trying to get a dig at the Government. The key point, of which he will be aware, is that we have robust coinage in this country. We have strong enforcement mechanisms to ensure that counterfeit coins and notes are rigorously followed up. The counterfeit note rate represents something like 0.013 per cent. of the average stock of notes in circulation. We take vigorous action in these areas, and I am sure he welcomes that.

Topical Questions

T1.[231536] Ms Karen Buck (Regent’s Park and Kensington, North) (Lab): If he will make a statement on his departmental responsibilities.

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

Ms Buck: My right hon. Friend may be aware of the Help for Heroes campaign, which is raising money to support those injured and disabled in the service of our country. Next week, contestants on “The X Factor” will release a charitable single to raise money for that excellent cause, but as things stand they are liable for VAT on the proceeds. I wonder whether there is anything that he can do to help.

Mr. Darling: I very much support the Help for Heroes campaign and the efforts made by contestants on the “The X Factor”. In recognition of that, I am proposing effectively to waive VAT on the sale of the singles. We will do that by making a donation to the fund equivalent to the value of the VAT.

T2. [231537] Andrew Rosindell (Romford) (Con): The Chancellor’s predecessor, the Prime Minister, once stated that losing control of public expenditure does not help the poor. How can the Chancellor reconcile that with his plans to increase both borrowing and public expenditure? Will he give an undertaking that he will not increase taxation, which would again harm the poor in our country?

Mr. Darling: If the hon. Gentleman thinks that our policy of supporting the economy is wrong, he should have a word not only with the shadow Chief Secretary, but also with the leader of his party, who said on the “Today” programme on 20 October that at a time like this

If it is good enough for the Leader of the Opposition, it ought to be good enough for someone who, I presume, supports him.

T3. [231538] Mary Creagh (Wakefield) (Lab): I recently visited TEi Engineering in Wakefield, an engineering firm that is training the next generation of young apprentices, men and women, to be welders to build the next generation of eco-power stations. It is desperate for further investment to increase the skills of its staff. Does my right hon. Friend agree that cutting £1 billion from the Train to Gain programme would be catastrophic for firms across the country?

Mr. Darling: I agree with my hon. Friend. Maintaining investment in training is essential. As we get through the present difficulties, the opportunities for this country and, importantly, for the people of this country are immense.

I also agree with what my hon. Friend said about nuclear power. At a time like this, when we must reduce our dependence on imported gas and oil, it is imperative that we invest in the new generation of nuclear power stations. That is another example of the Conservative party’s inability to face up to the difficult decisions that we need to make for the benefit of the people of this country.

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Dr. Vincent Cable (Twickenham) (LD): The Chancellor knows about the enormous anxiety in charities and local government about the billions lost in Icelandic banks, and the thousands of British savers whose savings disappeared because they were routed through Kaupthing Isle of Man. Now that he has confirmed that he was informed of the difficulties of Icelandic banks months ago, will he place in the House of Commons Library a full record of the information that the Treasury was given over the past year, and the action that it took on the back of it to protect British savers’ interests?

Mr. Darling: As the hon. Gentleman knows, the Financial Services Authority, which is the regulator of banks, building societies and other financial institutions, monitors what is happening in institutions all the time. That is its job. It is not surprising that, from time to time, the FSA may have concerns about institutions. It speaks to those institutions, and it gets them to try to address those concerns.

As for the Icelandic banks, the fundamental problem was not here but in Iceland. As the hon. Gentleman knows, Iceland has effectively had to take over its banks. I have been trying to persuade the Icelandic authorities to ensure that they honour their obligations to savers in this country under their compensation scheme, and also that they treat creditors in this country fairly and on the same footing as Icelandic creditors. I have had a number of discussions with the Icelandic Prime Minister and Foreign Minister, but so far we have not been given those assurances, which is why I have had to step in to guarantee retail depositors and savers in this country. That is where our obligation lies. I will continue to do whatever is necessary to protect people who find themselves in that position, but what we really must do is encourage the Icelandic Government to conclude their discussions with the International Monetary Fund. Some of those discussions will, I hope, ensure that British creditors—indeed, all creditors outside Iceland—are treated fairly, and in the same way as those living in Iceland.

T4. [231539] Anne Snelgrove (South Swindon) (Lab): Is it bad judgment to oppose Government action to protect small savers’ money in banks and building societies, or just another example of social justice from the perspective of the Bullingdon club?

Mr. Speaker: Order. The hon. Lady really should cut that behaviour out.

Mr. Andrew Robathan (Blaby) (Con): During the recession of which the Prime Minister has spoken, tax receipts are likely to fall rapidly. What assessment has the Chancellor made of future tax receipts, and is there any truth in reports in the newspapers that the Treasury is already considering—beside borrowing—tax rises and cuts in public services?

The Chief Secretary to the Treasury (Yvette Cooper): As I think is clear to everyone, when a global credit crunch hits, it hits not only tax receipts from the financial sector but tax receipts from such things as stamp duty. We have made it clear that it is right to maintain public spending and increase borrowing to support the economy at a time like this, but we are also cutting taxes this year, for example through increased tax allowances and by
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freezing fuel duty below the level of inflation. That is in contrast to the policy of the hon. Gentleman’s party, which would increase taxes on fuel duty this year.

T5. [231540] Mr. Mark Todd (South Derbyshire) (Lab): One third of the work force in South Derbyshire are employed in manufacturing industry in companies such as Toyota, Rolls-Royce and JCB, which invest heavily in the future in terms of both capital and development costs. In the context of the design of a fiscal regime that will support such businesses, will the Chief Secretary comment on alternative suggestions whose implementation might improve some of the incentives for investment of that kind?

Yvette Cooper: I think that my hon. Friend is referring to tax reliefs for investment and allowances for business. I think it right for us to support businesses through what is a difficult time for not only the world economy but the United Kingdom economy. That includes, for manufacturing industry, tax allowances for investment, and claims that cutting those allowances would help businesses are simply disingenuous.

T6. [231541] Mr. David Evennett (Bexleyheath and Crayford) (Con): We all know the value of charities within our society and, in recession, people will need the support of charities even more. I understand that Treasury Ministers have recently met representatives of the sector to discuss possible measures to support it. Will that support be forthcoming soon and, if so, where?

Mr. Darling: There was a meeting with charities in relation to the Icelandic banks and those discussions with charities are continuing. We are aware of the position in which they find themselves and, as I said to the hon. Member for Twickenham (Dr. Cable) a moment ago, if Iceland can resolve its problems, that will be helpful for all creditors. We are aware of the problems and the discussions will continue.

Mr. Dennis Skinner (Bolsover) (Lab): Is the Chancellor aware that it makes a lot more sense to borrow money to create jobs and to help small businesses rather than spending the whole summer cadging money for the Tory party to shore up its finances?

Mr. Speaker: Order. I thought the hon. Gentleman was going to give us a good example, but that did not happen.

T8. [231543] Mr. Alistair Carmichael (Orkney and Shetland) (LD): When the Minister met the delegation that I led on 4 June, in a positive meeting, she agreed to undertake an examination of the case for fuel duty derogation for remote island communities. It is now a number of months since that meeting. What progress has she made? When can we expect a conclusion? Although the Prime Minister’s recent remarks on the cost of fuel were very welcome, people in my constituency would love to pay the price that he was complaining about.

The Exchequer Secretary to the Treasury (Angela Eagle): Obviously we understand the issues, particularly in island communities. We are continuing to look at the matter, and we will make announcements in due course,
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but I hope he will recognise that there has some been some easing of fuel prices since the time we met. I understand that his community has to face extra costs, and I assure him that we are focusing on the matter.

Harry Cohen (Leyton and Wanstead) (Lab): Will the Chancellor confirm that the latest estimate from the Bank of England of worldwide write-offs is £2.8 trillion? Is not a cause of that the uncontrolled creation of credit by private financial interests, which has jeopardised the public and the public interest? There have been a lot of dubious financial practices invoked as part of that. When will we get a full-scale analysis from the Treasury of all the causes, so we can make sure that it does not happen again?

Mr. Darling: I agree that there are lessons to be learned as a result of what has happened over the past few years. It is important that we act on that and, as I said last night at the Mais lecture, I hope to be in a position to publish some preliminary conclusions and proposals in the not-too-distant future.

T9. [231544] Richard Ottaway (Croydon, South) (Con): The Minister may use anti-terrorism laws to throw hecklers out of the Labour party conference, but does he not consider it utterly inappropriate to use them to freeze the assets of foreign banks? Can he not see that that impacts on the Government’s reputation and the country’s reputation? I could not care less about the Government’s reputation, but I care about the country’s reputation.

Mr. Darling: The legislation that we used was approved by Parliament and I believe that it was necessary for us to take action to safeguard the position of creditors in the United Kingdom. It is important that we take action, because there is a clear public interest there.

Albert Owen (Ynys Môn) (Lab): The Prime Minister has made positive statements, welcomed by Members and by people across the country, about oil companies and utility companies passing on the cut in oil prices to their customers. Can Treasury Ministers encourage banks to pass on the recent, and future, cuts in bank rates to its mortgage borrowers and customers?

Yvette Cooper: My hon. Friend is right. It is important that, with world oil prices coming down, those cuts be passed on to consumers because, as we all saw, the price increases were certainly passed on to consumers. We have seen many petrol companies passing on price cuts, and it would be good to see all petrol companies bringing prices down right across the country. Gas and electric companies could also do more to pass on reductions in oil prices in their fuel bills. He is also right that it is important to ensure that the banks do their bit, particularly given the amount of support that the Government are providing for the banking system as a whole to keep it safe, and we will be setting out further procedures to monitor the way in which banks can do that in future.

Sir Patrick Cormack (South Staffordshire) (Con): Does the Minister accept that for many small and medium-sized businesses the last straw in these difficult
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times is having to find the money to pay the rates on empty properties? Please will the Government recognise that as an urgent problem?

Angela Eagle: We are aware of the worries about empty property relief, but it is important to remember that the vast majority of that relief went to the City of London and four other areas. We are looking into the matter, and we understand the difficulties, but it is also important to remember that when 100 per cent. relief was given, buildings remained empty for a very long time and therefore were not recycled, which is economically inefficient, and that the areas that had the most access to the relief had some of the highest rents in the world.

Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Does my right hon. Friend recognise the difficulties being faced by businesses in ports such as Hull and Liverpool now that they have been presented with three years of backdated business tax bills? What steps is he taking to deal with that injustice?

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