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Mr. Timms: We are certainly looking for changes in banking, as my right hon. Friend the Chancellor of the Exchequer will be setting out in a few moments' time. However, I would not agree with my hon. Friend in characterising this scheme as a cover-up, because it has given a lifeline to thousands of businesses in constituencies such as his. One of the most impressive things about it is the very good record of repayment. More than 90 per cent. of the repayments due come in on time once an agreement has been made. It is a very good model for the future.
Capital Projects
12. Gwyn Prosser (Dover) (Lab): What recent assessment he has made of the effects on the economy of his Department's policy of bringing forward spending on capital projects. [297061]
The Chief Secretary to the Treasury (Mr. Liam Byrne): Bringing forward capital spending is part of a response to the recession that is now supporting up to half a million jobs, helping 300,000 people stay in their homes and helping 150,000 businesses with their cash flow. We forecast that these measures will return us to growth by the end of the year.
Gwyn Prosser: Advancing building programmes is also good news for us in our constituencies, but what can we do to encourage hospital trusts that do not have access to capital funds and that rely on their surpluses to advance their programmes and create jobs and construction programmes earlier?
Mr. Byrne: We are very proud of the fact that under this Government, the national health service now has 100 new hospitals, which have been built through the increases in capital expenditure. That means that the NHS estate is now in a completely different shape. We plan capital spending to continue at different kinds of levels in the future, but even by 2013-14 we expect capital expenditure to be higher than the levels we inherited. Of course, there will be trusts around the country that will also choose to use the different flexibilities that they have, such as the private finance initiative or internally generated resources, but our determination to carry on with the business of modernising the NHS is undiminished.
Mr. Graham Stuart (Beverley and Holderness) (Con): Will the Minister consider using capital expenditure to reduce the debt on the Humber bridge? In particular, will the Treasury agree to carry out its own analysis of the economic impact of the tolls on the local area and on the Exchequer, and match the promise made by my hon. Friend the Member for Tatton (Mr. Osborne)?
Mr. Byrne: I will certainly be happy to consider evidence such as that the hon. Gentleman mentioned and any other evidence that he would like to bring forward.
Mr. Clive Betts (Sheffield, Attercliffe) (Lab): Is my right hon. Friend aware that at a recent meeting of the Yorkshire and the Humber Regional Committee, representatives of the CBI, the chambers of commerce, the Engineering Employers Federation-the EEF-and the Federation of Small Businesses all welcomed the Government's stimulus package, including the bringing forward of capital projects? They said that although the economy recovery has started to happen-
Mr. Speaker: Order. There is pressure on time and we must make progress. I want a question with a question mark-one sentence please.
Mr. Betts: Those organisations questioned whether it was right to withdraw the stimulus package now and whether doing that would have a disastrous effect on economic recovery.
Mr. Byrne: As my right hon. Friend the Chancellor said, the fiscal stimulus that we have been able to put in place, because we went into this recession with low levels of debt, together with low interest rates, is now supporting up to 500,000 jobs. The disastrous thing to do would be to withdraw that stimulus too quickly. The Conservative party has set its face against a fiscal stimulus and it is for early withdrawal of that stimulus, which would be such a disaster for our economy.
Tax Avoidance
14. David Taylor (North-West Leicestershire) (Lab/Co-op): What steps he is taking to reduce the incidence of tax avoidance. [297063]
The Financial Secretary to the Treasury (Mr. Stephen Timms): We have taken action domestically and internationally to change the game for those who bend rules on tax. We detect avoidance early, we tackle it quickly and the tax avoidance disclosure system introduced in 2004 has helped to close more than £12 billion in avoidance opportunities.
David Taylor: The Tax Justice Network has done the world a great service in producing its global index of secrecy, which reveals the most secretive financial centres-the City of London being the fifth worst. Why cannot we take an international lead in tackling tax avoidance by first ending the clandestine and corrupting culture that permeates the City of London?
Mr. Timms: We have led work internationally in the G20 on tackling tax evasion and have won plaudits from many for doing so. Her Majesty's Revenue and Customs will be setting up a dedicated tackling tax evasion unit to target those with offshore bank accounts who do not come forward under the current new disclosure opportunity-I believe that my hon. Friend will welcome that. In the G20, we have led a dramatic change on tax havens-there has been a huge amount of profitable activity-just over the past year.
Credit Unions
15. Mr. David Drew (Stroud) (Lab/Co-op): What discussions he has had with the Secretary of State for Business, Innovation and Skills on the potential for the location of credit union activities in post office branches. [297064]
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): The Government recognise the potential for closer working between the Post Office and credit unions. I understand that the Post Office and the Association of British Credit Unions Limited have been holding discussions on this subject. The Government will be holding a national consultation on banking services at the Post Office, which we hope to launch by the end of the year.
Mr. Drew: I thank my hon. Friend for that pleasing news, but we have heard these ideas before and it is vital that the poorest among our community, who find it most difficult to borrow, can go to the most trusted institution-the Post Office-to use credit unions. Will she ensure that that happens as a matter of urgency?
Sarah McCarthy-Fry: I absolutely agree with my hon. Friend. He may be interested to learn that back in September I officially opened the first credit union to share premises with a post office, which is in Pollok, in the constituency of my hon. Friend the Member for Glasgow, South-West (Mr. Davidson). One could see the potential for the synergy between the post office and the credit union: they were not just sharing premises; they were also sharing the staff.
Banking Sector Reform
16. Mr. Brooks Newmark (Braintree) (Con): When he last met the Governor of the Bank of England to discuss reform of the banking sector. [297065]
The Economic Secretary to the Treasury (Ian Pearson): The Chancellor of the Exchequer and the Governor of the Bank of England meet regularly to discuss a range of issues.
Mr. Newmark: Given that and the fact that when Lehman Brothers collapsed neither it nor the banks actually understood the counter-party risks, has the Minister discussed the right systems and ensured that they will be in place when the system is reformed?
Ian Pearson: As the hon. Gentleman rightly points out, the collapse of Lehman Brothers was of systemic importance to not only the US economy, but the world economy, and he will be very aware of the actions that followed it. The issue has had extensive scrutiny, and he will also be aware of the administration position at the moment. Those lessons have and are being learned, which is one of the reasons why actions have already been taken by the Financial Services Authority and it is another reason why further reforms in the financial services Bill will follow the Queen's Speech.
Miss Anne Begg (Aberdeen, South) (Lab): May I ask my hon. Friend, as my constituents are also asking, what the Government are going to do in terms of taking up the regulation of the whole financial sector and not just the reform of the banks?
Ian Pearson: As my right hon. Friend the Chancellor has pointed out on a number of occasions, we cannot return to business as usual. Reforms have been implemented already and more action needs to be taken. I am sure that my hon. Friend will want to support the Government's future legislative programme, which will have an important piece of legislation-the financial services and business Bill-contained in it.
Comprehensive Spending Review
17. Mr. Andrew Mackay (Bracknell) (Con): When he expects to announce arrangements for the next comprehensive spending review. [297066]
The Chief Secretary to the Treasury (Mr. Liam Byrne): Departmental budgets are set until April 2011 and, as the Chancellor has made clear, he will set out more detail on his spending plans in the pre-Budget report.
Mr. Mackay: Can we have a guarantee that the arrangements for the spending review will be put in place very quickly? Obviously the people of this country will want to see detailed proposals from the Government ahead of the election.
Mr. Byrne: As my right hon. Friend the Chancellor has made clear, the public will be in no doubt about the choice between the two principal political parties and their spending plans at the next election. There is no precedent for when spending reviews should be carried out. They are an innovation that was introduced by this Government, and sometimes they have been produced a year before one spending review expires and sometimes two years before. At a time when there is a degree of uncertainty in the economy, as the right hon. Member for Bracknell (Mr. Mackay) would admit, it would wrong to be too hasty about what budgets will look like in the year of the Olympics and thereafter.
Topical Questions
T1. [297073] John Robertson (Glasgow, North-West) (Lab): If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr. Alistair Darling): The core purpose of the Treasury remains as I set out in the last Treasury Question Time.
John Robertson: My right hon. Friend will be aware of the people who desperately need working tax credits. With the volatility in the employment market these days, can he tell me whether there is a shortfall in the uptake of working tax credits and, if so, what does he intend to do about it?
Mr. Darling: In relation to the child tax credit, take-up is about 81 per cent. and lone parents make up about 95 per cent. of that, whereas parents in the lower income bracket make up about 92 per cent. There is quite a high take-up among parents with children. In relation to the take-up of working tax credit among families without children, although 100,000 more people have claimed the working tax credit, we need to do more to encourage people. It is a way of ensuring that people's incomes can be maintained, especially at a time of economic downturn.
Mr. George Osborne (Tatton) (Con): May I ask the Chancellor about the forthcoming pre-Budget report? Everyone knows that the date keeps being put back, presumably because the Government cannot agree on what to put in it. The Bank Governor says that the country cannot afford another fiscal stimulus while the Prime Minister is busy briefing Sunday newspapers that he is planning a new spending splurge. As the third person in this unhappy marriage, what does the Chancellor think should be done, or is he just keeping his head down and avoiding the mobile phones?
Mr. Darling:
The pre-Budget report will be an opportunity for us to see clearly that the measures that I set out a year ago and in the Budget this year are having
an effect. I believe that the measures that we put in place to support our economy, some of which will end this year, such as the VAT decrease, and others of which will continue, such as the time-to-pay measure that was mentioned earlier by my right hon. Friend the Financial Secretary to the Treasury, are having an effect on the economy. Perhaps the difference between the hon. Gentleman and I is that I believe that we need to ensure that we set out plans to ensure that we have growth, because otherwise we face a decade of low growth and low employment. That is the prescription and the counsel of despair that the Conservatives are offering and I do not think that it is the right option for this country.
T3. [297075] Gwyn Prosser (Dover) (Lab): We all appreciate the need for pay restraint, especially among the higher paid, but does my right hon. Friend appreciate the demoralising effect it has when we tell low-paid public sector workers that their pay is to be frozen and their jobs threatened? In particular, does he appreciate the impact on hard-working border control officers based in Dover and Calais?
The Chief Secretary to the Treasury (Mr. Liam Byrne): We are very proud of our record over the past 10 or 11 years in fixing and improving the pay of some of the people in our public services who make the biggest difference and who work hardest on behalf of this country. However, as the Chancellor has said, once recovery is locked in it is important that we get on with the business of consolidation, which is why we have committed to halving the deficit over four years. We expect people in public services, particularly those who work at senior levels, to show a degree of leadership. That is why the evidence that we have submitted to pay review bodies calls for a 0 per cent. increase for senior groups and for increases of between 0 and 1 per cent. in 2010-11 for other public sector work forces who are not covered by three-year deals. I know that this will sometimes cause a degree of anxiety but we have to get the balance between investing in public services and the pressures of public sector pay absolutely right.
T2. [297074] Miss Anne McIntosh (Vale of York) (Con): Why is the Chancellor seeking to change the tax status of holiday lets, which are frequently operated on farms by small businesses in rural areas? The proposal will harm precisely those businesses that Treasury Ministers were just saying that they were trying to help.
The Financial Secretary to the Treasury (Mr. Stephen Timms): This matter was discussed in the Finance Bill Committee this year. There has been a tax break for furnished holiday lettings for some time but, as it is available for UK properties only and not for properties in Europe, it is no longer clear that it is consistent with European law. We have announced a change, and we will publish an impact assessment of that change at the time of the pre-Budget report.
T5. [297077] Alun Michael (Cardiff, South and Penarth) (Lab/Co-op): Does my right hon. Friend the Chancellor agree that it is very unlikely that Northern Rock would have run into problems if it had remained a mutual? Is that not the best possible reason for him to look proactively for ways to return it to the mutual sector? Would not that be in the long-term national interest?
Mr. Darling: The problems at Northern Rock were substantially caused by a new breed of management that came in and did not seem to understand that terrible problems can arise if one's sole source of funding for lending dries up. It was a management problem as much as anything else.
As I said in reply to my right hon. Friend the Member for West Dunbartonshire (John McFall), I would like to see more mutuals. However, anyone coming in for Northern Rock would have to ensure that they had sufficient funds to achieve mutualisation. Whether the business is a mutual or a plc, there needs to be capital behind it. That is a question that anyone coming in for the business would need to address.
T4. [297076] Mr. Peter Bone (Wellingborough) (Con): Last week, the Prime Minister demoted the Chancellor from No. 2 in the Cabinet to No. 4. Has the Chancellor had a falling-out with the Prime Minister?
Mr. Darling: I do not know where the hon. Gentleman got that news from. However, I can tell him that the Prime Minister and I are agreed that the challenges faced by this country are best met by making sure that we continue to support the economy, and that we get growth, jobs and high employment in the future. That is more interesting to us than rather pathetic party politics.
T8. [297080] Derek Twigg (Halton) (Lab): In view of the importance of large capital projects in providing jobs, will my right hon. Friend ensure that the Treasury releases as soon as possible the funding already allocated for the Mersey Gateway bridge if, as is expected, the project is given the go-ahead?
Mr. Byrne: This is very much on our radar. I understand that the planning inspector's report following the recent public inquiry is expected to be received in the middle of December. The recommendations will then need to be considered carefully by my noble Friend the Secretary of State for Transport before a decision can be announced. As is normal in these cases, a decision on funding will be taken at that stage. However, I am very grateful for the consistent lobbying that my hon. Friend has done on this subject.
T6. [297078] Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): On the repeal of the fixed holiday let rules, will the Minister explain why he did not consult at all either tourism or agricultural bodies before taking this damaging action? That is especially important, given the close relationship between farming and tourism in constituencies such as mine in Pembrokeshire.
Mr. Timms: As I explained earlier, the change was made for a straightforward legal reason. It looked as though the law required it but, as I said, we will publish an impact assessment that will be available for widespread discussion.
T9. [297081] Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op): Does the Chancellor agree that the increasing use of technology and mechanisation in the banking industry has led, dangerously, to many local managers losing a lot of knowledge about, and touch with, their local businesses? If he does agree, what talks will he hold with the banking industry to reskill the banking fraternity in local matters?
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