Examination of Witnesses (Questions 100-119)
RT HON
LORD MANDELSON
14 JANUARY 2009
Q100 Chairman: Just to say on the
record, we did hear evidence from the SME sector in December,
a month ago, that officials in your Department and the Treasury
were making it very clear that the Christmas and New Year holidays
would delay consideration of it and they expressed real concern
that they sensed a lack of urgency.
Lord Mandelson: That is why our
holidays and officials' holidays were caught short whilst this
work was going on throughout the holiday. If you heard the representatives
on the radio this morning of all the small business organisations
congratulating the Government, firstly, for what we are doing
and, secondly, the speed with which we are doing it, I do not
think you would take us and our officials to task in quite that
way.
Q101 Chairman: I am just repeating
what the small business sector said before Christmas.
Lord Mandelson: They do need Christmas
Day and Boxing Day.
Q102 Miss Kirkbride: From a Government
that is going to double our national debt to a trillion pounds,
we are very grateful that you are taking such care over public
money. You did just say that the Government does not want to spread
money around, you did give £12 billion in the VAT cut before
Christmas. I want to take you up on something you said this morning
on the radio, you said that was £270 for everybody.
Lord Mandelson: Average.
Q103 Miss Kirkbride: Yes, exactly,
but it will not really help that many pensioners or low paid people
because that equates to around £15,000 of VAT-able spending
and I doubt very much whether very low paid people would spend
that much money on VAT-able goods. I am not sure that was terribly
well directed either to the people who need it the most.
Lord Mandelson: I do not agree.
Q104 Miss Kirkbride: But you agree
it is £15,000 of VAT-able spending?
Lord Mandelson: With respect,
I do not agree with you that it would have been better to spend
that money on income tax cuts or raised tax allowances when so
many more people will benefit from the VAT reductions who do not
pay tax at all. I strongly agree with Kenneth Clarke whose views
on the VAT reduction were made absolutely clear. He said in November,
advocating what the Government should do, "I would look at
a temporary reduction in value added tax which is the best way
of stimulating spending".
Q105 Miss Kirkbride: A great many
business leaders do not agree with him because he is a past chancellor.
I think this is diversionary tactics. Chairman, I do not think
we need to hear anymore of this.
Lord Mandelson: He went on to
say in November, "As far as I am concerned, as far as this
fiscal stimulus is concerned, I would go for a VAT reduction".
Well, hear! hear! Kenneth Clarke!
Q106 Mr Hoyle: We are backing Clarke,
absolutely!
Lord Mandelson: On this matter,
as on other matters, for example, to do with Europe and his commitment
to Europe, I strongly back him. Bring back Ken, please!
Q107 Miss Kirkbride: One other question
I would like to ask you, Secretary of State, on the basis that
there does not seem to be a sense of urgency in your Department,
was what you called earlier "refinements", by which
I think you were talking about Basel II and the return to the
banks on the money that the taxpayers have given them. You are
talking about refinements, but that goes to the heart of the credit
crisis and why the banks are not lending money because they are
required to build up their balances, both by the Basel
II arrangements and by the preference share issues which were
given by the Government, so they are caught in a cleft-stick.
You call these issues refinements like they are not a major issue,
like they are not the thing which needs to be sorted out today
because that is why they are not lending money. They could lend
a whole host more money than is on offer from your scheme if these
issues were sorted out. You call them refinements like it is something
that we will worry about come the summer when we have got nothing
else better to do. A sense of urgency, Secretary of Stage, what
do you have to say about that?
Lord Mandelson: I would say you
are talking about apples and pears. Basel arrangements are rather
more fundamental than, for example, the capital ratios required
by the Financial Services Authority or the premium attached to
the recapitalisation that was introduced, apples and pears.
Q108 Miss Kirkbride: They all add up
to the same problem though.
Lord Mandelson: Some can be addressed
rather more easily and quickly than others.
Q109 Miss Kirkbride: But none of
them is being at the moment.
Lord Mandelson: I think I said
that they are being addressed, you have dismissed them.
Q110 Miss Kirkbride: But when? Can
you give us a timescale on when they will be addressed?
Lord Mandelson: You have dismissed
them as refinements.
Q111 Miss Kirkbride: No, you called
them refinements, Secretary of State, not me. Those were your
words, not mine, I took it down as you said it.
Lord Mandelson: No, no, you dismissed
the refinement. I did describe them as refinements, you dismissed
it.
Q112 Miss Kirkbride: A curious word.
Lord Mandelson: Let us call them
adjustments, let us call them revisions, call them what you want,
all I know is we have got to keep looking at this and making any
changes needed in order to get the results that we need. We are
active on the case. The Chancellor is actively talking to the
banks at the moment and has been for a few weeks now. These are
very complex technical areas of possible adjustment and when conclusions
have been reached, announcements will be made.
Q113 Miss Kirkbride: You ridiculed
the Liberal Democrats' spokesman earlier, as is your want with
any of your Opposition, do you rule out nationalising the banks?
Lord Mandelson: I did not ridicule
him, I actually described him as eloquent.
Miss Kirkbride: Do you rule out nationalising
the banks?
Mr Hoyle: We have done.
Q114 Miss Kirkbride: Just yes or
no.
Lord Mandelson: Do you mean fully
nationalise?
Q115 Miss Kirkbride: However you
choose to term it, do you rule out nationalising the banks?
Lord Mandelson: You are asking
the questions, not me.
Q116 Miss Kirkbride: Nationalising
normally means the public owns 100%, so do you rule out nationalising
the banks?
Lord Mandelson: It is not on the
Government's agenda.
Miss Kirkbride: Thank you.
Chairman: We have got some other more
detailed and important questions to ask as well. Adrian wants
to ask about HM Revenue and Customs.
Q117 Mr Bailey: In fact, this is
a supplementary to an earlier question by Brian about your working
relationship with the Treasury and we quite understand that you
have a very good relationship at ministerial level. However, the
supposed flexibility of HMRC in dealing with tax issues with regard
to small businesses, I have got a particular horror story in my
constituency which I will not go into in detail at the moment.
Lord Mandelson: Share it with
me or with Alistair.
Mr Bailey: The thrust of my question
is what are you doing with the Treasury and HMRC to ensure that
an almost cultural change which should be taking place on the
ground is actually happening in their dealings with small businesses?
Q118 Chairman: Can I add to Adrian's
question as well. I have been talking to representatives of the
small business sector, the impression they form is there is a
great deal of regional variation in the action of HMRC, some are
being very co-operative, very helpful, fully flexible, others
are falling back to the bad old ways of the Inland Revenue. I
think Adrian is right, there is a cultural problem in some parts.
Lord Mandelson: I was not aware
of that, that is new to me and I did not know that. I will pass
it back and look into it. As you know, some time ago the Government
talked to HMRC about their attitude to companies which were struggling,
that had cash flow problems and having trouble getting cash in
and wanted the cash out to, amongst others, the HMRC to be slowed
down on deferral. HMRC responded very positively to that, certainly
as an organisation as a whole and I know in many parts of the
country. I will look at what you say about this being rather patchier
than we had realised. This is a major contribution that the HMRC
is making. It represents a couple of hundred and more millions
of pounds' contribution by the HMRC in deferred tax-line abilities
which they are making to struggling businesses to enable them
to get through the downturn. They are making their contribution,
it is a real one. I know it is greatly appreciated by many companies,
but if it is patchy, then we will look at that.
Q119 Mr Bailey: I notice in your
written statement today you have got a business payment support
line number, which is very welcome, but one of the problems I
have found with this company in my constituency is their attempt
to enter into a dialogue with HMRC. They have been passed from
pillar to post. Again, I would emphasise the need to monitor this
to see that it is working effectively.
Lord Mandelson: Adrian, I absolutely
take what you are saying. I do not have direct ministerial responsibility
for this or for HMRC, but I will make sure the Chancellor and
his colleagues are aware of what you have said.
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