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Mr. Darling: I did look at whether the relief should be concentrated on regeneration areas, but the problem was that a lot of people or businesses who have empty properties in areas that are not in regeneration areas
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would be perfectly entitled to say, “What about me?” I introduced a measure that helped 70 per cent. of empty property, where people will not pay rates as a whole. Of course, we will continue to consider what other measures we can put in place to help businesses. My answer to my hon. Friend’s question is that I did consider that option, but it would have created other unfairnesses of its own.

Dr. William McCrea (South Antrim) (DUP): Will the Chancellor tell us what specific steps he intends to take to address the extortionate interest rate premiums that banks are placing on small businesses? Will he consider imposing penalties on banking institutions that are deemed to be working against the consumer and small businesses?

Mr. Darling: As I have said on a number of occasions, it is important that banks behave reasonably towards their customers. Part of the reason why we are setting up more intensive scrutiny of the banks is to ensure that if we see patterns emerging and if we believe that banks are reacting unreasonably, we can take appropriate action. The rest of Britain’s banks could look at what the RBS Group is doing, because that might act as a model for other banks. They need to ensure that they treat their customers fairly, because they will rely on those customers for their business in years to come.

Ms Dari Taylor (Stockton, South) (Lab): I most warmly welcome the statement. I particularly welcome the new tax on salaries of over £150,000. I think that my constituents will see the tax as a just tax, and therefore it will be a popular tax. Will the Chancellor reassure the House that that tax will be collected and that we will not find that people who ought to pay that tax will avoid it by having part of their salaries paid in school fees, thus denying the public purse once again?

Mr. Darling: I agree with my hon. Friend: I believe that the tax system needs to be fair. Many people who earn quite substantial sums in this country have done pretty well over the past 10 years, and it is right that they should meet their fair share. Yes, of course, I believe that, if people are due to pay tax, they should pay their tax.

Adam Afriyie (Windsor) (Con): Does the Chancellor accept any responsibility whatsoever for the economic difficulties faced by people today?

Mr. Darling: The Conservative party, alone in the world, is trying to make out that, somehow, nowhere else in the world is affected by any of the problems of the past 12 months, but I have made it clear on many occasions that, over the past 10 years, we have built up an extremely strong economy. More people are in work. We have been able to do more to help people, particularly those who lost out in the Conservative years, and I have been able to announce more help today. Of course, I will accept responsibility for anything that I am charged with—but if the Conservative party wants to come up with solutions to today’s problems, it might at least start by understanding what the problems are, and a lot of the problems emanate from the credit crunch.


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John McDonnell (Hayes and Harlington) (Lab): My right hon. Friend has announced a further £5 billion-worth of efficiency savings within the public sector. What calculation has been made of the job cuts that will result?

Mr. Darling: On efficiency savings, I find it hard to believe that a Government who spend—certainly, directly, if we set aside benefits and pension payments—more than £400 billion a year cannot find £5 billion by being more efficient. I do not think that any organisation can proceed on the basis that it is impossible to be more efficient. I am afraid that I disagree with my hon. Friend on that point.

Mr. Andrew Tyrie (Chichester) (Con): Will the Chancellor tell us which, if any, of the immense problems that the country now faces today are home-grown?

Mr. Darling: I would have more respect for the hon. Gentleman if he or his colleagues could come up with a single proposal that would help people in today’s economy. So far, not one of them has managed to do that.

Mr. Frank Field (Birkenhead) (Lab): May I bring the Chancellor back to the 6 million taxpayers who are still losers after the abolition of the 10p rate? Although I understand why he has had to find billions upon billions of pounds for City slickers who have got us into this mess, may I express my disappointment that the Government have not yet found the funds fully to compensate those lower-paid taxpayers who lost out with the abolition of the 10p rate? May I assure him that there would be tremendous support among Labour Members if he told us that, when he makes his Budget statement next year, he will be able to find those funds, fully compensate that group of workers and draw a line under that unhappy episode?

Mr. Darling: My right hon. Friend will recall that, when he and I discussed the issue earlier this year and when I announced the proposals that helped just over 4 million households, I wanted to return to this issue in the pre-Budget report. I have done that; we are now helping another 500,000 households. Of course, I will always keep under review what I can do to help people, particularly those who are on low incomes, but I am sure that he would recognise that I need to deal with many things in any Budget or pre-Budget report. However, I hope that he will accept that I said that I would come back to this, that I have been able to help many more people and that I will continue to keep the matter under review.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Many of my constituents are beginning to be quite concerned about the future of the North sea oil and gas industry and exactly where the credit crunch is hitting highly geared companies’ investment. The Chancellor said that he was considering ways to incentivise and increase investment in the North sea. May I emphasise the urgency of that? Will he give more indication to the House about how he is taking that forward and what time scale he sees for the delivery of such incentives?

Mr. Darling: I understand people’s concerns, particularly with the oil price coming down. Although that has many welcome effects, it obviously has an effect on the outlook in the North sea. As the hon. Gentleman
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knows, my right hon. Friend the Prime Minister and I met leaders of the oil industry in Banchory earlier this year. We agreed to work together. We are publishing further proposals today to allow us to develop such things further.

One of the things that the industry told us is that it wants to work closely with us, because there is probably a coalition of interests: both of us want to ensure that we extract everything that we possibly can from the North sea. We said that we would work closely with the industry to ensure that the tax regime helps that process. I am glad to say that I believe that we are working well together, and I hope that things will come to a satisfactory conclusion as soon as possible.

Gordon Banks (Ochil and South Perthshire) (Lab): I welcome my right hon. Friend’s announcements on small and medium-sized businesses throughout the UK, but will he continue to monitor both the specific and the general effects that the announcements today, and his actions in recent weeks, will, and have had have, on the housing industry? Will he undertake to take necessary further action if he deems that it is important to do so?

Mr. Darling: Yes, I can give that undertaking. It is important that we recognise that the housing industry has been going through a difficult time. It is in all our interests that we maintain the supply of housing. The measures that I have announced today bring forward spending in the housing industry. We have made it clear to the Scottish Executive that if they wish to re-profile their spending, we would be very happy to talk to them. We have made that clear for several weeks now. If they want to do something similar, we will do our best to accommodate that.

Anne Main (St. Albans) (Con): Is the Chancellor seriously telling us that when we can get 20, 40, 70 per cent. off on the high street, and when there are “buy one, get one free” offers on houses and cars, the average hard-working family has simply been waiting for a 2.5 per cent. cut in VAT to press ahead and spend money it has not got? I do not think so.

Mr. Darling: I think that any family would welcome any reduction in prices that they can possibly get. If those reductions come through special offers from supermarkets or shops, that is fine. If that can be added to by a reduction in VAT, surely that helps as well.

Nigel Griffiths (Edinburgh, South) (Lab): Does my right hon. Friend not realise how welcome the cut in VAT is—the second major cut from a Labour Government, who cut VAT on fuel? Will he take no lessons from the Conservative party, which doubled VAT and imposed VAT on fuel, which hit every single family, and pensioners worst of all?

Mr. Darling: My hon. Friend is right. I am sorry that the right hon. and learned Member for Rushcliffe (Mr. Clarke) is no longer here, because I am sure that he remembers only too well what happened when the Tories wanted to increase VAT on fuel. It caused them considerable discomfort.


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I just do not agree with the Conservative party. I think that if we can help to reduce household bills and put money into the hands of people on low incomes, that is precisely what the Government ought to be doing at a time like this.

Sir George Young (North-West Hampshire) (Con): The largest item in the Chancellor’s package today is the £12.5 billion reduction in VAT. What percentage of goods on which VAT is payable are imported?

Mr. Darling: Of course it is the case that some goods are imported, but it is also the case that if people go into the shops and buy goods they might otherwise not have bought, that must be good for the economy as a whole.

Clive Efford (Eltham) (Lab): I welcome the business payment support service that my right hon. Friend is setting up. I spoke to the director of my chamber of commerce today, and he suggested something similar to this measure, by allowing the quarterly payments for VAT and corporation tax to be paid in monthly instalments. I urge my right hon. Friend to ensure that the service is an early intervention service so that small businesses do not incur huge bank charges and that they get the support to which he alluded. In addition, does it cause him any distress at all that the Conservative party changes its policy from week to week?

Mr. Darling: On the latter point, I think that most people have noticed that. On my hon. Friend’s substantive point, it is important that if firms are getting into difficulties, the HMRC helpline is there so that they can get advice. If people are in difficulty, it is always best to contact Revenue and Customs as soon as possible, rather than wait for a problem to build up. That will be helpful, because it is important to help, especially small businesses, in the way that my hon. Friend describes.

Mr. Richard Spring (West Suffolk) (Con): Will the Chancellor explain why so many OECD countries built up budgetary surpluses in the past few years and we singularly failed to do so?

Mr. Darling: If the hon. Gentleman cares to look at the position of most countries of comparable size to ours, he will see that most of them have had far higher debt levels than we have had. If his charge against us is that we spent money on schools, hospitals, roads and housing, I will plead guilty to it, but I remind him that the Conservative party usually called for us to spend even more money on all those things, not less. [Interruption.] An hon. Member shouts, “Not true.” If he looks back at the press releases over the years, he will find that, from time to time, the shadow Chancellor has had a terrible job trying to keep some of the shadow Ministers under control.

Dr. Nick Palmer (Broxtowe) (Lab): Some of the Conservative press this morning described today’s statement as a gamble; does my right hon. Friend not agree that the biggest gamble in the face of danger is simply to do nothing?

Mr. Darling: I agree with my hon. Friend. Countries and organisations around the world, and many respected commentators in this country, have said that at a time like this, when the world is facing unprecedented pressure,
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and when we have seen a credit crunch the likes of which we have not seen for generations, it would be utterly irresponsible for Governments to stand back and say, “Let the recession run its course.” I am sorry, but the view that we should let the recession run its course is not one to which I can subscribe.

Stewart Hosie (Dundee, East) (SNP): On the help for families, we welcome the VAT cut and the vehicle excise duty changes, but question why on earth the Chancellor wants to put petrol duty up at this time. On the help for businesses, we welcome the flexibility that he has introduced, and the one-year deferral of the small companies corporation tax rate, but notice that there is no change to the standard rate, or to the income tax paid by the smallest businesses that do not pay corporation tax. On direct public investment, although he is borrowing £300 billion over the next three years, he is only bringing forward £3 billion of direct public investment from the 2010-11 Budget. That is not new money; it is simply being brought forward. Will the £3 billion be subject to Barnett consequentials?

Mr. Darling: No, because the money is being re-profiled. As I said, and as the hon. Gentleman said, it is not new money. If, for example, the Department for Communities and Local Government brought forward money from its budget to spend it this year, rather than in three years’ time, it would be difficult to argue that it was new money, and that his colleagues in Scotland should get a share of it. Of course, the Scottish Executive could re-profile their spending, if they wanted to. We have made that clear since September. As of a couple of days ago, no such request has been made, but if they would like to make such a request, that would be eminently sensible. It would be much supported by people in Scotland. Perhaps the hon. Gentleman should pass the message on to the right hon. Member for Banff and Buchan (Mr. Salmond), who might want to consider it in the course of his busy day.

In relation to fuel duty, I said that we have reduced VAT on fuel, but I am increasing duty on it, so that the effect will be as though there was no reduction in fuel duty. What people pay is remaining exactly the same, because I am taking account of the fact that petrol and diesel prices have fallen quite a lot, even in the last month or so. We are not allowed to have a large number of differential VAT rates, so that is the only way in which I can maintain the status quo, which is what I have done.

Mr. Gordon Prentice (Pendle) (Lab): This is warm homes week, and it is freezing cold in Pendle, so I welcome the additional £100 million announced, but will the Warm Front programme be able to gear itself up and deliver a measurable increase in activity this winter, so that people see the benefit of that money?

Mr. Darling: I hope so. I hope that the relevant Secretaries of State will be able to ensure that that is precisely what happens.

Mr. John Redwood (Wokingham) (Con): In his speech, the Chancellor said that this year’s borrowing would be £78 billion, but the Budget book tells us that central Government need to borrow £153 billion this year—£93 billion more than at the Budget forecast. As he believes in transparency, why did he leave out so much of the borrowing?


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Mr. Darling: I gave the House the borrowing figures, as the House would expect. I am also laying before the House the pre-Budget book. It is all there, and I am happy for hon. Members to look at it. Equally, I would be happy to listen to proposals from Conservative Members. The only proposal that I recall from the right hon. Gentleman recently related to the deregulation of the mortgage market, which I do not think would be a very good idea.

Mr. Andrew Love (Edmonton) (Lab/Co-op): Has my right hon. Friend taken the opportunity, through the Treasury’s model of the economy, to crunch the numbers on doing nothing? I am thinking about lost output, the implications for employment and, indeed, the implications for the public finances of not doing anything.

Mr. Darling: I have not done that, but I did notice that the chairman of the CBI said this morning that

I happen to agree with him.

Mr. David Heath (Somerton and Frome) (LD): The Chancellor appears to have completely abandoned the normal purdah before budgetary announcements, with the result that the VAT cut was the least unexpected announcement almost ever. But, if the purpose of the VAT cut was to put more money into the pockets of less well-off people, would not a targeted cut in income tax have done it better? If the purpose is to stimulate spending in our high streets, how is a 2.5 per cent. VAT cut going to work when 20 per cent. to 25 per cent. discounting in all major stores is not?

Mr. Darling: As I said a few moments ago to the hon. Member for St. Albans (Anne Main), any price reduction would be welcomed by people going out to shop, and I have actually reduced income tax, especially for basic rate taxpayers, because I am introducing the increase in the personal allowance. Income tax personal allowances take time to be fully implemented; a cut in VAT can be implemented much more quickly.

Rob Marris (Wolverhampton, South-West) (Lab): In what way will the welcome measures in the pre-Budget report assist manufacturing, which is so important in the west midlands and elsewhere?

Mr. Darling: In two ways, I believe. First, the general impact of putting £18 billion into the economy between now and 2010 will help the economy generally. It helps in terms of confidence and general outlook. The fact that the Bank of England has been able to reduce interest rates to 3 per cent., the lowest that they have been since the 1950s, will also help businesses, because many of them borrow, which is why it is important that we ensure that banks pass on their interest rates.

The measures that I announced today include the fund to help small firms at better rates than before so that they can borrow between £1,000 and £1 million, and measures for manufacturers that are exporters. There are many smaller firms in the west midlands and in other parts. Indeed, I have visited a number of small firms in the west midlands that export extremely successfully, and additional help is available in the guarantee. Those are just a few examples of how we can help, but, of course, we will need to do other things, too.


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