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14 July 2009 : Column 149

Comprehensive Spending Review

12. Mr. David Amess (Southend, West) (Con): What steps his Department is taking in preparation for the next comprehensive spending review. [286202]

The Financial Secretary to the Treasury (Mr. Stephen Timms): As my right hon. Friend the Chancellor has said, departmental budgets are set until April 2011. We are less than half way through the current spending review and current economic uncertainty makes it unrealistic to set departmental budgets now, all the way through to 2014. My right hon. Friend will have more to say about that in the pre-Budget report and the Budget.

Mr. Amess: I listened to what the Minister said, but I do not think it will or can wash with the House. The British economy is obviously in a terrible state and the only people who do not realise it are the Government. The Institute for Fiscal Studies has said that departmental spending will fall between 2011 and 2014. Will the Minister now admit that?

Mr. Timms: As I have said to the House, we will set out departmental budgets at the next spending review. There is a good deal of uncertainty, including about the kind of things that the IFS is forecasting at the moment, and it would be rash to set out detailed projections and commitments at this stage. That is why my right hon. Friend the Chancellor will come back to it later this year or in the Budget next year.

Mr. Andrew Tyrie (Chichester) (Con): Is not the truth that this has nothing to do with economic rashness and everything to do with political rashness? Is not the real reason why we do not have a comprehensive spending review that the Government know that they would have absolutely no chance at a general election if they had to reveal the scale of the cuts required to repair the mess in which they have put this country?

Mr. Timms: No, that is certainly not the case. There is an unprecedented worldwide downturn, which we are dealing with-and dealing with very effectively-but that causes uncertainty. For that reason, it is not right to set out public spending forecasts all the way to 2014. I would be interested to know from Conservative Members whether, as the shadow International Development Secretary said yesterday-

Mr. Speaker: Order. I am very grateful to the right hon. Gentleman for his thoughts on that matter, but he need not take them any further.

Counter-recessionary Policies

13. Hugh Bayley (City of York) (Lab): What recent assessment he has made of the effectiveness of his Department's policies to counter the effects on the UK economy of the global recession. [286203]

The Economic Secretary to the Treasury (Ian Pearson): The Government have taken decisive action to support the UK economy, and we continue to monitor a range of indicators as part of our overall assessment of the
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state of the economy. As we said in the 2009 Budget, we expect growth to return by the end of the year, and it is forecast that the economy will pick up progressively throughout 2010 and 2011 as the macro-economic stimulus builds and credit conditions ease.

Hugh Bayley: At the G20 summit in London in March, many other countries took a lead from Britain in adopting fiscal stimulus packages. When the NATO Parliamentary Assembly's economics committee met the International Monetary Fund recently, it expressed the belief that such packages were reducing the size of the downturn in the global economy by some 7 per cent. What assessment have the Government made of their effect in the UK and in other countries?

Ian Pearson: My hon. Friend is right to make the basic point that you cannot cut your way out of a recession. The Government have taken concerted action domestically, but we have also worked very effectively internationally to ensure a co-ordinated fiscal stimulus, and I think it absolutely right for such action to be taken. It is, we believe, starting to have some effect. As the Chancellor said, there is a lot of anxiety out there, but we stand by our forecasts. One of the key things that distinguish us from the Opposition is that we, as a Government, are taking real action in launching programmes and providing real support for people and businesses-measures that have been opposed by the Conservative party.

Sir Peter Tapsell (Louth and Horncastle) (Con): While the more cautious entrepreneurs wait to see whether the second shoe of the global crisis is still to fall, does the Treasury understand that early publication of a sound comprehensive financial review would do much to reassure them and bring investment back into the market?

Ian Pearson: We have set an overall direction that is very clear and was announced in the Budget. As the hon. Gentleman will know from the evidence of previous recessions, many entrepreneurs who have taken bold actions at such times have grown world-scale businesses as a result. We believe that this is a good time for UK companies to invest in their growth prospects. We want to invest in building Britain's future, and that is what the Budget has been all about.

Net Contribution to the EU

14. Mr. Peter Bone (Wellingborough) (Con): What is his most recent estimate of the UK's net contribution to the EU in 2010-11. [286204]

The Economic Secretary to the Treasury (Ian Pearson): As the hon. Gentleman knows, the Government's latest forecast of UK net contributions to the European Community budget was published in table C9 on page 238 of the 2009 Budget Red Book. I can tell him, however, that the forecast is for a net contribution of £6.5 billion in 2010-11.

Mr. Bone: I am grateful to the Minister for his reply, but he forgot to mention that the UK's contribution is £3.5 billion-117 per cent.-more than it was last year. We could buy 70 more Chinook helicopters for that. Does the Minister believe that the British people would
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rather see billions of pounds given to European farmers or spent on extra helicopters to support the brave servicemen and women who are fighting in Afghanistan?

Ian Pearson: As the hon. Gentleman well knows, our contributions to the EC budget have been set as a result of negotiations. He will be aware of the negotiations that took place in 2005. Only recently, he had an exchange with the Prime Minister in which the Prime Minister made clear our belief that it is right for us to share the burden of membership of the European Union with the new accession countries so that every part of the European Union can look forward to prosperity in the future. As the hon. Gentleman knows very well, that remains our position.

Dr. William McCrea (South Antrim) (DUP): Does the Minister accept, at a time of recession, the importance of spending as much of our money as possible in the United Kingdom rather than feeding the bottomless pit of the EU?

Ian Pearson: It is easy to engage in Euro-bashing, but the simple fact is that the UK Government have been trying to recognise the contributions that we are required to make to the European Community budget, while at the same time ensuring that we negotiate hard, which we were doing on Friday in Brussels and we will continue to do until we agree the budget in November this year for 2010. At the same time, we ensure rigorous value for money, and the UK will continue to press strongly on that, as we always do.

Personal Debt

16. Annette Brooke (Mid-Dorset and North Poole) (LD): What his most recent estimate is of the level of personal debt in the economy. [286206]

The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): The Bank of England collects and publishes statistics on the level of personal debt in the economy, and according to its latest statistics, total personal debt was £1.46 trillion in May 2009.

Annette Brooke: Against that worrying background, my local citizens advice bureau really welcomes debt relief orders but is very concerned about the availability of intermediaries. Is the hon. Lady aware of those concerns, and what action is she taking?

Sarah McCarthy-Fry: We are obviously in discussion with all organisations that give debt advice, including the CAB, and I am sure we will continue to have discussions on the point that the hon. Lady raises.

Topical Questions

T1.[286214] 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 Department remains as I set out in previous Treasury questions.

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Mr. Holloway: Does the Chancellor think that a 50p rate of income tax would slow the economy's return to growth?

Mr. Darling: As I said in the Budget, it is necessary for us to raise revenues and I think it fair to look to people who have the broadest shoulders to take some of that burden. Other countries will face exactly the same problems over the next few months and years, and I believe that the measures I have announced as a whole in the Budget and the pre-Budget report will help to support our economy and help it to grow.

T3.[286216] Ms Sally Keeble (Northampton, North) (Lab): Is my hon. Friend aware of the level of concern about the high charges for mortgage arrears being charged by some providers-for example, up to £150 by a debt counsellor, and up to 2 per cent. in standing monthly charges? Will he talk to the Financial Services Authority and see whether some controls or standards can be set to keep down the very high charges that are affecting a number of my constituents?

The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): We do of course recognise the worries that many households have about meeting mortgage payments, keeping their home and falling into negative equity. We will explore any avenue that will help people in that situation.

T2. [286215] Paul Rowen (Rochdale) (LD): If all taxpayer liabilities against RBS and Lloyds are taken into account, the current loss is more like £20 billion, rather than the £11 billion claimed by United Kingdom Financial Investments Ltd. In that context, can the Chancellor of the Exchequer give the House an assurance that there will be no early sale of these assets-before the general election, say?

Mr. Darling: Yesterday, the UKFI was simply recording the book price of the shares for RBS and Lloyds, which are actually worth a bit more than in February, but as the shares are not being sold today, it is not a real loss. I can tell the House that it is our policy to return these shares to the private sector, but we will only do that when it is the right thing to do for the taxpayer, for financial stability, and for the wider economy. All those conditions were clearly set out in both the UKFI annual report yesterday, and in the White Paper that I published last week on the regulation of financial markets. We will enter into a sale only when we judge that the time is right: in other words, we are in no hurry to do so.

T4. [286217] Lynne Jones (Birmingham, Selly Oak) (Lab): Is the Governor now satisfied that the Bank of England has the necessary powers to fulfil its statutory responsibility to protect the stability of the financial system?

Mr. Darling: As my hon. Friend knows, I set out the Government's proposals last week both to strengthen the powers available to the FSA and to build on the additional powers that we gave to the Bank of England under the Banking Act 2009, which was passed earlier this year. We will continue to consider, with the Governor and the FSA, what additional powers might be necessary, but the measures I announced last week, which are
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broadly in line with what other Governments and countries are doing in different parts of the world, will make it easier in future to ensure that we act on warning signs if things start to go wrong. That is very important.

T5. [286219] Simon Hughes (North Southwark and Bermondsey) (LD): While the Chancellor and his colleagues are responsible for some bank assets, is there not an opportunity to use them to provide guarantees or loans for the infrastructure that we need for the green and renewable energy products and plant that the Prime Minister and the rest of the Government keep telling us that we need? Is not now the time to use this asset at this moment of environmental crisis?

Mr. Darling: The hon. Gentleman will no doubt recall that in the Budget I set out proposals significantly to increase the amount of money that we are spending to improve environmental and energy efficiency. He will no doubt also be aware that the Secretary of State for Energy and Climate Change will publish a White Paper tomorrow, which contains significant proposals that will go a long way to ensuring that we meet our obligations. We have already done more than most other countries in relation to our Kyoto obligations, and we will continue to do everything that we can to ensure that we have secure energy supplies that are much cleaner and greener in the future.

Mr. Eric Illsley (Barnsley, Central) (Lab): I wish to return to the subject of the bingo industry. Will my hon. Friend the Exchequer Secretary seek an early meeting with the Bingo Association to clarify the point that she made on Report, when she said that she was still waiting for information fromthe association about its figures? She also said that the industry had accepted the taxation regime that the Government introduced in the Budget. I am sure that she meant to say that it had accepted the calculations. Will she seek an urgent meeting to clarify that information to the industry?

Sarah McCarthy-Fry: As I clarified earlier, dialogue with the bingo industry is definitely ongoing. The last meeting I had was two weeks ago, at which the industry presented some data, but they were not complete. We have agreed that the industry will bring more data forward.

T6. [286224] Miss Anne McIntosh (Vale of York) (Con): The Chancellor will be aware that the current comprehensive spending review gave a further £2 billion for PFI initiatives in waste disposal management options to enable the UK to meet its EU landfill directive obligations and recycling targets. Does the Minister acknowledge that none of those PFI projects has gone forward because the banks need more details and more reassurance, so the landfill targets will not be delivered within the prescribed time limit?

The Chief Secretary to the Treasury (Mr. Liam Byrne): This is the kind of infrastructure project that we keep under constant review. It is also closely watched by regional Ministers through the work that I do with the Minister for Regional Economic Development and Co-ordination. We will look into the schemes that the hon. Lady highlights, and if they are being held up
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through a lack of information, we will make sure that steps are taken to accelerate these projects and get delays out of the way.

David Taylor (North-West Leicestershire) (Lab/Co-op): Last time I looked, the objectives of the Audit Commission were to drive efficiency and effectiveness in local public services, but last week its chief executive dismissed critics of public sector cuts as "shroud-wavers". Will the Minister have a quiet word with Mr. Bundred, put him back in his box and explain that one of the roles of the public sector is to help to sustain the economy during a time of recession?

Mr. Byrne: That is an argument that the chief executive and chairman of the Audit Commission would recognise. Indeed, fruitful conversations take place day to day and week to week between Ministers and the commission about how we can strengthen the role of local authorities in delivering what is a broad package of help, put in place and financed by this Government to ensure that this recession does not cut for long or deeply.

T7. [286225] Andrew George (St. Ives) (LD): With rising repossessions and 500,000 more families on local authority housing registers, what assessment have the Government made of the effectiveness of their policy to intervene to protect those in the most desperate housing need?

Mr. Byrne: As the House will know, a wide range of measures is in place to ensure that we minimise the number of people who lose their home during this recession. I know that the Council of Mortgage Lenders has already revised down at least once the number of repossessions that it anticipates this year, and it acknowledges that it is the rapid action taken by the Government, and the range of help that has been put in place, that will help to deliver that lower number. Obviously, every repossession is a tragedy for the family concerned: we want to ensure that we act to keep such repossessions to an absolute minimum.

Mr. Jim Devine (Livingston) (Lab): Will my right hon. Friend reassure health service workers that the recommendations of the pay review body will be honoured in full?

Mr. Byrne: Yes, I will.

T8. [286227] Mr. Andrew Mackay (Bracknell) (Con): Why does the Chancellor of the Exchequer think that the First Secretary told the nation that there would be no comprehensive spending review before the general election?

Mr. Darling: I listened very carefully to all the interviews given by my right hon. Friend during the course of that day and I entirely agree with much of what he said.

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