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The Financial Secretary to the Treasury (Mr. Stephen Timms): No, we have no plans to rescind IR35. It remains important that people with personal service companies should not gain an unfair tax advantage over direct employees.
Ann Winterton: That is a disappointing reply because IR35 blurs the distinction between freelancers and employees for their tax liability. Although fraudulent employment should be tackled, why punish genuine freelancers when enterprises are needed to generate wealth for the United Kingdom economy, and when there is no evidence that IR35 raises any money for the Exchequer?
Mr. Timms: I would turn the question back on the hon. Lady. Why should somebody who is effectively in an employment relationship with an employer, but with a personal service company, have a tax advantage over a direct employee? I vividly remember the heated debate after IR35 was announced more or less exactly 10 years ago, but it has operated satisfactorily since then. The key point is that people who are in employment should be taxed as employees. IR35 has therefore addressed a potential unfairness.
5. Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): If he will hold discussions with the Isle of Man Government on reimbursement of the legal costs of UK depositors of Kaupthing Singer and Friedlander Isle of Man bank arising from the scheme of arrangement against the bank administered by the Isle of Man authorities. 
The Economic Secretary to the Treasury (Ian Pearson): Kaupthing Singer and Friedlander Isle of Man is a subsidiary not of KSF in the UK, but of the Icelandic parent company. Oversight of KSF Isle of Man is the responsibility of the Isle of Man's Financial Supervision Commission. Arrangements for depositors in KSF Isle of Man, including for the reimbursement of legal costs, are a matter for Manx insolvency law and the Isle of Man Government.
Mr. Sheerman: Is not my hon. Friend passing the buck? People in my constituency and throughout the United Kingdom invested in the Derbyshire building society, thinking that their savings were safe. They have lost most of their savings and they are still waiting for any recompense. The legal costs will haemorrhage away what hope they have of ever getting anything. They are UK citizens who have lost their life savings, and I believe that we should do something to help them.
Ian Pearson: It is my understanding that investors in the Derbyshire were clearly informed when their savings were transferred to KSF Isle of Man. It is a fact that KSF Isle of Man is regulated by the Manx authorities, in the same way as other jurisdictions have their own regulators. It is not possible for the UK Government to intervene in those circumstances. I am more than happy to discuss the issue with my hon. Friend in more detail, if he wishes. I recognise the concern of savers in his constituency and others.
Mr. Gregory Campbell (East Londonderry) (DUP):
The Government moved early to protect savers with Northern Rock and other large financial institutions in the United Kingdom. Do not savers with smaller
institutions, such as the Derbyshire and the Presbyterian mutual society in Northern Ireland, deserve the same protection?
Ian Pearson: As the hon. Gentleman knows, following discussions with some of the party leaders in the Northern Ireland Administration, the Government have announced that we will conduct a review of the Presbyterian mutual society and the situation facing savers. I understand that that review has just started and is due to report in the autumn. The hon. Gentleman will also know about the general issue of regulating industrial and provident societies and credit unions in Northern Ireland. A report was published on that matter on 8 July, to which I refer him.
7. Greg Mulholland (Leeds, North-West) (LD): What assessment he has made of the effect on levels of employment in the pub and hospitality industry of the changes in alcohol duties announced in the 2009 Budget. 
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): Many factors affect the level of employment in the hospitality and pub industry. No separate assessment has been made of the effects of the changes in alcohol duty.
Greg Mulholland: I thank the Exchequer Secretary for her reply. Let me tell her that 5,000 jobs are estimated to have gone since the 2 per cent. rise was introduced. May I bring it to her attention and to that of the Government that the Royal Bank of Scotland owns 1,000 tied pubs, with some tenants facing unreasonable rents and beer prices, forcing them out of work and on to the dole queue? How does she feel about that, given that RBS is part Government owned? Will she and the Government support calls for RBS to sell those pubs to tenants at fair market prices?
Mr. David Hamilton (Midlothian) (Lab): I have been in correspondence with my right hon. Friend the Chancellor. One of the things that has come up is the fact that the tariffs on beer are exactly the same whether it be prepacked or draught beer. It is European legislation that is stopping us from recognising the difference. Surely as a Government we can go to our Labour MEPs-and, indeed, to Governments across Europe-and get rid of that tariff, because that is what is closing a number of pubs at the present time.
Sarah McCarthy-Fry: I thank my hon. Friend for his question. He will be aware that there will be a review of the alcohol directives in 2010. When the new Commission is in place, a work programme will be published on what areas it will look at. We will work closely with the Commission to ensure that what comes out of the review is best for the UK industry.
The Chancellor of the Exchequer (Mr. Alistair Darling): Departmental budgets are set until April 2011. As I said in the Budget statement, the current economic uncertainty means that it would not make any sense to try to set departmental budgets now for every year to 2014. However, as I said in the Budget, we will return to that issue at the pre-Budget report and then again in the Budget.
Mr. Swayne: Given the economic difficulty and the background, can the Chancellor tell us whether there is any difference in principle between setting the overall expenditure envelope and setting the departmental total?
Mr. Darling: There is quite a big difference I would have thought, but the hon. Gentleman has helped to draw attention to the fact that in the Budget I had two principal aims. One was to ensure that we continued to support the economy now, by ensuring that we maintain spending at its present levels, as we intended from 2007. The second aim was to ensure that we halve the deficit over a five-year period. Both those things were important: it is important to support the economy now, but it was also important that we set out a clear sense of direction, so that we can get borrowing down. That was the strategy that we set out, and it remains our policy.
Dr. Vincent Cable (Twickenham) (LD): There is clearly much uncertainty, but does the Chancellor accept the estimate of the OECD, which is that we now have a structural deficit on the budget of around 7 per cent. of GDP, which the public spending review will have to incorporate? As he agrees with us, I think, that it would be foolish and counter-productive to resort to fiscal tightening in a recession, how many years does he think it would take thereafter to eliminate that structural deficit?
Mr. Darling: First, my forecasts have not changed since I set them out in April in the Budget; and as the hon. Gentleman knows, we will update our forecasts at the pre-Budget report. He is quite right too to identify the fact that there is still quite a lot of uncertainty. Although there have been some encouraging signs in this country and other parts of the world that we are on course to recovery, the problems in world trade are affecting exports. Although oil prices have come down over the past few days, the fact that they have risen poses another threat that we will have to deal with. However, as for making further forecasts or further judgments on what else we can do on spending, that is something to which I said I would return at the pre-Budget report and the Budget next year.
Mr. Philip Hammond (Runnymede and Weybridge) (Con): I would like to conduct an intragovernmental sight test. The Schools Secretary has claimed to be able to see the spending on schools and hospitals rising in real terms after 2011. If the Chancellor focuses carefully, can he see that too, or is his vision of the future altogether blurrier?
Mr. Darling: I think that I have made our position absolutely clear as far as spending beyond 2011 is concerned. However, if the hon. Gentleman wants to play at sight games, perhaps he could explain why one moment we get the Conservatives promising tax cuts and another moment we are told that they are off for six years. One moment we are told that the Conservatives want to spend more; then we are told that they want to cut more. The hon. Gentleman ought to attend to some of his own difficulties before he addresses anything else.
Mr. Stephen Dorrell (Charnwood) (Con): The Chancellor just said that it was his priority to halve the scale of the public deficit. How can that possibly be realistic, and how can he be taken seriously, if he defers indefinitely the comprehensive spending review that must be the essential building block for delivering the policy that he has just told us from the Dispatch Box is a priority?
Mr. Darling: I do think that it is important that we reduce the deficit, which is why I have set out plans to reduce it by half over a five-year period. That is a reasonable period of time, given where we are at the moment. I said in reply to the hon. Member for New Forest, West (Mr. Swayne) that, at this stage, it would not make any sense to set out detailed departmental totals in the midst of what are still pretty uncertain conditions. I said that we would come back to that at the PBR and the Budget, and that remains our position.
9. Willie Rennie (Dunfermline and West Fife) (LD): What recent discussions he has had with the Scottish Executive on UK Government assistance for the construction of a new crossing over the River Forth. 
The Financial Secretary to the Treasury (Mr. Stephen Timms): My right hon. Friends the former Chief Secretary to the Treasury and the Secretary of State for Scotland met the Scottish Finance Minister in March to discuss financing for a new Forth bridge.
Willie Rennie: I warmly welcome the acceptance that the UK Government should help the Scottish Government to fund this vital new crossing, but when will the Government come forward with real new money to help to pay for the bridge? Will they also consider speedily bringing in new borrowing powers for the Scottish Government, so that they can spread the cost over a number of years, as has been proposed by the Calman commission?
Mr. Timms: I am glad to recognise the importance of the second Forth crossing, and to support the importance of its construction. Funding, however, is a devolved decision, and this is a matter for the Scottish Executive to determine. My right hon. Friends offered flexibility to help within the economic framework applying to the UK as a whole, and I hope that that flexibility will allow the project to proceed.
Rob Marris (Wolverhampton, South-West) (Lab):
Can my right hon. Friend assure me that the Government will hold firm on this? Scotland already gets shedloads of extra money under the Barnett formula. It is entitled
to raise its own taxes, and this Government should stand firm against this bridge, for which Scotland wants even more money.
Mr. Timms: My hon. Friend makes a forceful point. Let me simply say that this is an important project, but it needs to be carried out within the economic framework applying to the UK as a whole. My right hon. Friend the Chancellor has just set out some of the Government's constraints and objectives in relation to the public finances over the next five years, and this decision needs to be made within that context.
10. Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): What reports he has received of the progress made by Sir John Chadwick in the formulation of his advice on an Equitable Life ex gratia payment scheme. 
11. Jo Swinson (East Dunbartonshire) (LD): What reports he has received of the progress made by Sir John Chadwick in the formulation of his advice on an Equitable Life ex gratia payment scheme. 
The Chief Secretary to the Treasury (Mr. Liam Byrne): Sir John provides regular updates to the Government on progress. He has now established his office and appointed key members and the actuarial advisers Towers Perrin. On 16 June, Sir John issued a document setting out his proposed approach and requesting that representations be made to him by this Friday.
Sir Robert Smith: I thank the Minister for his answer. While the ex gratia scheme fails to meet the needs and expectations of the victims of maladministration by the Government over Equitable Life, it should still be speedily and efficiently introduced. To that end, will he tell us what time requirement has been placed on Sir John to bring in the scheme? Does he also understand that it is more than appropriate for Sir John to meet the concerned MPs and members of all-party groups who want to lobby him on this issue?
Mr. Byrne: That is a fair comment. I spoke to Sir John Chadwick about this question this morning, and his office has confirmed that he would be very happy to continue to receive representations from Members of this House. The question of the speed of his conclusions is also an important one, but I would like him to balance speed with coming to the right conclusions. He will obviously have to go through an enormous amount of information about policyholders, which will have to be thoroughly analysed before any conclusions can be drawn about the right ex gratia scheme to correct this injustice. Sir John told me this morning that it will be much easier for him to pin down what the next stages will be after this Friday, when all the representations have been received. He hopes to publish a further document pointing out the next steps in August.
Jo Swinson: I appreciate what the Minister says about ensuring that we get the right scheme, but nine years after this saga started, and with 15 policyholders dying every day, how much longer does he think it is reasonable for people to wait?
Mr. Byrne: I would just like to underline my previous answer and to say that speed is of the essence now. It is vital that justice be delivered to the policyholders of Equitable Life. At the same time, however, I appreciate the enormous burden that has been placed on Sir John to get to grips with understanding where there have been losses and the scale of those losses, and where hardship has been caused and the dimensions of that hardship. The hon. Lady will appreciate that those considerations are all vital if Sir John is to establish an ex gratia scheme that will correct this injustice that has so incensed Members of the House.
Mr. Lindsay Hoyle (Chorley) (Lab): We hear what my right hon. Friend has to say, but the truth is that there is not a constituency in the country that has not been touched by the plight of Equitable Life policyholders. The time has now come to show compassion and that the Government care. Let us get on with it; let us pay out the cheques and have done with it once and for all.
Mr. Byrne: That urgency is shared by me and by Sir John Chadwick, but my hon. Friend would agree that we do not want an ex gratia scheme that does not correct the injustices, which have been accepted by the Government and widely acknowledged on both sides of the House. My hon. Friend would also accept that Sir John has an enormous amount of information to go through, and I would rather that he proceeded with urgency but produced an ex gratia scheme that is right.
Miss Anne Begg (Aberdeen, South) (Lab): A pensioner couple came to see me in my constituency on Friday. They have suffered greatly because of the collapse of Equitable Life. They have been living on an overdraft, and the bank has pulled the plug on it. The fact that the couple hoped to get something from the ex gratia scheme cut no ice with that bank. There are people who are in deep financial difficulty, and I urge the Government to get a move on and get some money into their pockets.
Mr. Mark Hoban (Fareham) (Con): It is now a year since the ombudsman produced her report and it is six months since the Government produced their response. Does the Minister not appreciate just how angry policyholders are that they still do not know how much they may receive or when they may receive it? Is it not time for the Government to give a clear deadline for when policyholders can expect to receive some payments in recognition of the losses they suffered as a result of the Government's maladministration of the regulation of Equitable Life?
Mr. Byrne: That anger is shared on both sides of the House, which is why I urge all Members to make representations to Sir John by this Friday. We have had a couple of good debates over the past few months, and it is important to keep up the momentum behind Sir John's work. That is why he proposed such a short timetable for receiving representations about where injustices and hardship have been caused, and why I am glad that he will produce a document setting out his next steps in August. All Members want a speedy resolution now.
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