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House of Commons

Tuesday 14 July 2009

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Business before questions

Canterbury City Council Bill

Motion made, That the Bill be now read the Third time.

Hon. Members: Object.

Bill to be read the Third time on Thursday 15 October.

Nottingham City Council Bill

Motion made, That the Bill be now read the Third time.

Hon. Members: Object.

Bill to be read the Third time on Thursday 15 October.

Oral Answers to Questions


The Chancellor of the Exchequer was asked-

Public Sector Pay

1. Mr. Charles Walker (Broxbourne) (Con): When he last met the chief executive of the Audit Commission to discuss levels of public sector pay. [286189]

The Chief Secretary to the Treasury (Mr. Liam Byrne): I met the chairman of the Audit Commission together with ministerial colleagues yesterday.

Mr. Walker: At a time of private sector pay freezes and public sector pay restraint, is it right that the leaders of our quangos are getting pay increases of up to 20 per cent. or more?

Mr. Byrne: The principle that must guide the rewards that go to leaders of quangos has to be very clear: they must be rewarded only on the basis of their performance on behalf of the public. However, the hon. Gentleman is right to allude to the necessity for public service leaders, no matter what part of the public sector they work in, whether it be the BBC or any other non-departmental public body, to set an example and to show restraint. That is why we have limited pay awards for senior civil servants, judges, senior NHS managers and NDPB chief executives in this financial year to just 11/2 per cent.

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Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): Does the Minister agree that there are substantial numbers of public sector workers who are low paid and do not deserve to have their pay frozen, and that although there is a need for pay restraint, it ought to be applied to those at the top of the public sector and, indeed, to those at the top of the private sector?

Mr. Byrne: My hon. Friend has an excellent point. It is incumbent on the leaders of public services, at such times, to show restraint and to set an example. However, I agree that over the past 10 years it has been important to give some above-average pay increases to front-line staff in particular, such as nurses, fire service workers and the police. If we look back at the average pay rises throughout the private and public sectors, we find that they basically come out about the same. However, within that overall improvement in public sector pay, we are proud to have achieved particular rewards for nurses, teachers and police, because, let's face it, for many years they were under-rewarded.

Mr. Greg Hands (Hammersmith and Fulham) (Con): The Minister says that he is in favour of quango-boss pay restraint, yet we are seeing figures of 22 per cent. at the Centre for Environment, Fisheries and Aquaculture Science, 17 per cent. at the National Treatment Agency for Substance Misuse and 16 per cent. at the UK Hydrographic Office. The Chancellor told The Sunday Times that

So which is it? Is he in favour of a pay freeze or huge rises for quango bosses?

Mr. Byrne: The argument is the argument that I made to the hon. Member for Broxbourne (Mr. Walker). There cannot be any automatic entitlement to bonuses or, indeed, to high pay. Any bonuses to people in the public sector can be awarded only on the basis of the performance that they have delivered for the public. Of course, on quangos there are wider questions-not just about pay, but about the number of quangos that we have in this country-and that is why I have asked for a cross-government look at the number that we have. What I will certainly not be doing, unlike the Opposition, is bringing forward plans for another 17 of them.

Bank Lending (Small and Medium Businesses)

2. Derek Twigg (Halton) (Lab): What recent representations he has received on the level of bank lending to small and medium-sized businesses; and if he will make a statement. [286190]

6. Mr. Jim Cunningham (Coventry, South) (Lab): What recent representations he has received on the level of bank lending to small and medium-sized businesses; and if he will make a statement. [286195]

The Chancellor of the Exchequer (Mr. Alistair Darling): The Bank of England's latest credit conditions survey suggested that there has been a second consecutive increase in the availability of corporate credit, in the second quarter of this year; and it expects a further easing in the following quarter.

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Derek Twigg: My constituency has seen some of the largest increases in unemployment in the country, so it is vital that the banks support viable businesses and maintain jobs. Will my right hon. Friend do all that he can again to encourage banks to lend to viable businesses? There is an inconsistency among the banks which has been brought to my attention by a number of constituents.

Mr. Darling: My hon. Friend raises an understandable concern. We do have lending agreements with those banks in which we have substantial shareholdings, the Royal Bank of Scotland and Lloyds Banking Group. Those agreements will this year see RBS lend £25 billion and Lloyds lend £14 billion. In some cases, instructions do not appear to have worked their way down to regional and local levels to ensure that high-level agreements have been translated into available lending for companies and individuals. I am meeting representatives of the banks shortly to discuss that matter further, but they must ensure that the people who are responsible for making those decisions make them in the way that we want; that, in many cases, they renew their acquaintance with some of the businesses with which they deal; and that they get back to some good old-fashioned banking.

Mr. Cunningham: This has been going on for quite a long time; the banks' slowness to help small businesses has often been raised in the House. My right hon. Friend said that he is to meet representatives of the banks shortly. However, what effective measures can he take, because small businesses are suffering, they are impatient, and people's jobs are at stake?

Mr. Darling: I agree with my hon. Friend. It is important, particularly if we are going to see a recovery, to ensure that credit starts flowing, especially to the small and medium-sized enterprises sector, which employs so many people in this country. As I said a moment ago, it is important that the banks honour their commitments. In addition to the commitments that I referred to, Barclays and HSBC have also given undertakings to lend additional money during the course of the next year. It is very important that we see that through.

Mr. Michael Fallon (Sevenoaks) (Con): Can the Chancellor confirm that lending to business under the small firms loan guarantee scheme and the enterprise finance guarantee scheme was only £178 million in the year just finished-less than half the original target-and that despite the taxpayer billions and all the Government's promises, new lending to business is still falling in this financial year? Why?

Mr. Darling: At the beginning of this year, the take-up of lending was slower than we expected, not only on the supply side, on the part of banks, for the reasons that I mentioned, but because, as the hon. Gentleman will know, we saw a very substantial downturn in the economy at the end of last year and the beginning of this year. The result has been that the rate of lending has not been as high as we would have liked. However, all the mechanisms are now in place-certainly the funding is in place-and it is now important to ensure that lending takes place and gets put into the economy as quickly as possible.

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John McFall (West Dunbartonshire) (Lab/Co-op): In the Treasury Committee's current inquiry into mortgage lending, the anecdotal evidence coming in to us indicates that credit scoring is tightening almost by the week. The Home Builders Federation has said that lenders are looking for any reason to refuse a loan. In his most recent appearance before the Committee, the Governor of the Bank of England said that lending to business is falling and lending to households is flat. When the Chancellor meets the banks, will he reinforce the point that they have not only economic but social obligations to ensure that this lending does indeed take place?

Mr. Darling: As my right hon. Friend knows, there is a balance to be struck in this regard. About a year ago in Treasury Question Time, Members on both sides of the House expressed concern about irresponsible lending. Inevitably, there has been some retrenchment on the part of lenders to ensure that when they lend money the borrower can maintain the repayments, which is obviously very important. The general point that my right hon. Friend makes has been made on both sides of the House. It is absolutely imperative, in this country and in others, that the banks see through the obligations that they have entered into. We need to get credit going again because that will be the thing that helps to drive the recovery. I will certainly be raising these matters when I meet the banks shortly.

Mr. George Osborne (Tatton) (Con): The Chancellor says that lending in the economy is lower than he expected. Perhaps that is something to do with the fact that half his schemes are not working. When he launched the asset-backed securities guarantee scheme, he said that it would

Can he tell us how many major banks have made use of that scheme?

Mr. Darling: We are still in discussions with the banks to ensure that that facility is there, but it has to be seen in the context of a range of other measures that we have introduced to help to stabilise the banks and to get lending going again. The hon. Gentleman would be on much stronger ground if he reminded the House that he opposes every single one of these measures because he is against any sort of stimulus in the economy at all.

Mr. Osborne: I remind the Chancellor that almost a year ago we proposed a national loan guarantee scheme, which would have solved many of these problems. The answer to my question is zero-not a zero per cent. rise, but simply zero. Indeed, the Communities and Local Government Committee has today produced a report saying that although the asset-backed securities guarantee scheme is

and the Labour Chair of the Committee says that

The Chancellor talks about context. That scheme has no take-up, the trade credit insurance scheme has helped just 13 firms, and the mortgage rescue scheme for homeowners has helped just six families since it was
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launched. Do not this Prime Minister and his Cabinet increasingly resemble a deluded emperor looking at Potemkin villages-schemes that were announced only in a press release and do not actually exist on the ground? Will the Chancellor go back to the drawing board, look again at the asset-back securities guarantee scheme, redesign it, re-price it, and get it working so that he can deliver, to coin a phrase, real help now?

Mr. Darling: The hon. Gentleman refers to his national loan scheme, which is all very well except that at one and the same time, he was saying that he would not provide any funding to ensure that it was actually in place. Then the shadow Business Secretary had to admit that if the Opposition had such a scheme, the taxpayer would be hit for it despite the fact that the Conservative party is against spending money on these things.

We are putting in place a range of measures to help businesses, for example on the time to pay and on enabling small businesses to carry back losses over three years, and the scheme to help the car industry-the scrappage scheme. A range of measures are being taken. I also have to say to the hon. Gentleman that a range of measures is in place to stabilise the banking system and ensure that it functions properly. All those things are in place. Some of them will take time to work their way through, but every one of them has one thing in common: they are opposed by the Conservative party. I welcome the Opposition's concern about them, but for the sake of completeness they should point out to people that they are against every single one of those measures to help our economy.

Dr. Brian Iddon (Bolton, South-East) (Lab): I have a medium-sized company in my constituency that distributes white goods to shops. Recently it has had to lay off a number of its work force because of the difficulty of acquiring trade credit insurance. May I ask my right hon. Friend what good news he may have for firms such as that, which are having such difficulties?

Mr. Darling: The Department for Business, Innovation and Skills has put in place measures to help with trade credit insurance, and it is examining the matter carefully to ensure that we can improve the availability of trade credit. That is very important not just for small firms but for large ones as well, and we are pursuing the matter because it is necessary to get it going.

Bingo (Taxation)

3. Bob Spink (Castle Point) (Ind): What recent discussions he has had with bingo operators on the effects on them of the taxation regime for bingo clubs. [286192]

The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): We have had continued dialogue with the bingo industry both before and since the Budget on the impact of the tax regime. I last met the industry just two weeks ago, and that dialogue will of course continue.

Bob Spink: I thank the Minister for her answer. She and the whole House understand the social importance of bingo to our communities, and that the business of bingo is a caring and a good business. Will the Government keep the taxation of bingo under review in future Budgets, to ensure that it is taxed fairly given its social function?

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Sarah McCarthy-Fry: The hon. Gentleman is an advocate for all his constituents who have written to him. I know from letters that I have received that many hon. Members have received correspondence from their constituents about the importance of bingo. Of course we will continue the dialogue with the industry, and these things are always kept under review in the pre-Budget report and the Budget.

Kelvin Hopkins (Luton, North) (Lab): May I suggest that my hon. Friend consult other Ministers about which forms of gambling are most dangerous and which are most innocent, and then consider taxing gambling according to the danger of addictive tendencies? That would be not only fair but helpful to those who suffer from compulsive gambling.

Sarah McCarthy-Fry: We have not had a policy of taxing gambling in accordance with how addictive or dangerous it is. That does not mean to say that we would not consider that in future. We have to take into account a lot of considerations as we look at different rates of duty, particularly for the bingo industry. The changes that we made in the Budget were designed to simplify the regime.

Sir Patrick Cormack (South Staffordshire) (Con): Does the Minister wish to go down in history as Miss Killjoy?

Sarah McCarthy-Fry: I do not wish to go down in history as Miss Killjoy, and I certainly do not think that is my function or what I am doing in this instance.

Jeff Ennis (Barnsley, East and Mexborough) (Lab): In a response on this very issue that I received from one of my hon. Friend's ministerial colleagues, dated 30 April, it was pointed out to me that over the past six years, taxation on bingo had fallen from 35 per cent. to 22 per cent. That is good news, but given that bingo clubs are still closing, would it not be better to consider lowering the tax even further? After all, it is better to get taxation at 20 per cent. from a thriving bingo club than to close clubs down at 22 per cent.

Sarah McCarthy-Fry: As I said in answer to previous questions, we are of course in ongoing dialogue with the industry about the impact of what has been done. My hon. Friend is quite right to say that as recently as 2003 the effective tax rate was 35 per cent. We will continue to look at the matter and, as I have said, we recognise the importance of bingo to many of our constituents, as evidenced by the correspondence that we have received.

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