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"We cannot go on like this...And you just need to look at Greece to see what happens if we do"
but yesterday, the shadow Chief Secretary, when asked on the television-
Mr. Speaker: Order. I am very grateful to the right hon. Gentleman, but he has volunteered his views on these matters at considerable length already. I think we will leave it there.
4. Rob Marris (Wolverhampton, South-West) (Lab): What recent assessment he has made of the likely effects on businesses of aligning capital allowances for plant and machinery with depreciation accounting rates. [314431]
The Economic Secretary to the Treasury (Ian Pearson): Reforms implemented in April 2008 ensure that capital allowances are more closely aligned with true economic depreciation, and that business investment decisions better reflect commercial rather than tax considerations.
Rob Marris: At a time when the manufacturing purchasing manufacturers' index is at last rising strongly, will the Minister assure me that this Labour Government will not slash capital allowances for plant and machinery, as proposed by the Conservatives? Such a cut would devastate manufacturing in the west midlands and the UK, and cause a double-dip recession.
Ian Pearson: My hon. Friend is right to point to the very promising manufacturing figures that were announced today and to recognise the importance of the capital allowances regime in ensuring investment in our future. Frankly, it is quite ridiculous to have a policy that says, "We're going to give with one hand, and take away with the other,"-a policy of giving corporation tax reductions but taking away the capital allowances that are needed by manufacturing businesses in this country. I am not against cutting corporation taxes-indeed, this Government have cut them by 5p in the main rate since we came to power-but we should not do it at the expense of investment in our future, which is what the Conservatives would do.
Mr. Julian Brazier (Canterbury) (Con): There is a strong case for a lower rate and a simpler structure. However, increasing the cost of labour through increases in national insurance contributions, while having a generous programme of capital allowances, is unbalancing the cost of capital versus labour, when we have 2.3 million unemployed.
Ian Pearson: The hon. Gentleman cannot get away from the fact that his policy is to reduce capital allowances to 12.5 per cent. and abolish the annual investment allowance. That would mean that more than 400,000 businesses in this country would see an 87.5 per cent. reduction in the tax relief that they can obtain at the moment. That is not a credible policy to support medium-sized businesses or investment in this country.
5. Geraldine Smith (Morecambe and Lunesdale) (Lab): What steps he plans to take to maintain the level of demand in the economy in the next 12 months. [314432]
The Chancellor of the Exchequer (Mr. Alistair Darling): As I set out in the pre-Budget report, we will continue to provide fiscal support during 2010-11, alongside the monetary policy action being taken by the Bank of England.
Geraldine Smith: Does my right hon. Friend agree that priority must be given to economic growth and protecting jobs and services and that, while it is important to reduce the deficit, immediate cuts could plunge this country into recession?
Mr. Darling: I very much agree with my hon. Friend. It is important to recognise that across the world, including in this country, it is the support given by Governments that has enabled us to avoid the recession becoming a global depression. It is also one of the reasons why countries are beginning to come back into growth. To remove that support prematurely would run the risk of derailing the recovery. That would be unforgivable, given all the pain that people have had to go through, and that is why we will continue to support businesses and families, to ensure that we get the recovery firmly established. Then we have not only to reduce the deficit, but to ensure long-term growth to provide the jobs in the future.
Mr. John Redwood (Wokingham) (Con): But cannot the Chancellor see that because he is overspending and over-borrowing in the public sector he is squeezing the private sector, which is having to pay high and rising rates of interest if it can get credit at all? What does he say to people with Skipton mortgages or small businesses that cannot borrow a single penny?
Mr. Darling: As the right hon. Gentleman will know, we have taken steps to ensure that the banks increase the amount of gross lending that they are putting into the economy. At a time when private sector investment has stopped or reduced, if it had not been for the public sector intervention, the downturn would have been much greater than it is. As it is, we can see signs of increasing confidence-he will have seen the survey of manufacturers published yesterday, which is very encouraging. Across the world, we can see the results of Governments acting together and making a real difference. To remove that support prematurely, if indeed that is the Opposition's policy today-who knows?-would be the wrong thing to do because it would be damaging to the country.
Kelvin Hopkins (Luton, North) (Lab): Does my right hon. Friend accept that the exchange rate is crucial in maintaining a good level of demand in the domestic economy, and that the bounce-back in manufacturing is due largely to the wise and substantial depreciation of sterling? Will he continue the downward pressure on the sterling exchange rate to ensure that our recovery is sustained?
Mr. Darling: As my hon. Friend knows, the Government's policy is to target inflation, but it is the combined efforts of fiscal policy and monetary policy that will make a difference and ensure that we can get through this and achieve the sustainable growth that is absolutely essential. It is very important that we secure that growth and we continue to take no risks with the recovery, and that is why the approach of the Conservatives is profoundly wrong.
6. Mr. Richard Spring (West Suffolk) (Con): What recent estimate he has made of the level of the UK budget deficit in comparison with other G20 economies; and if he will make a statement. [314433]
The Chief Secretary to the Treasury (Mr. Liam Byrne): The International Monetary Fund sets out estimates of deficits around the world. We remain determined to halve the deficit over four years, and we have set out clear plans to do so.
Mr. Spring: The Chief Secretary knows full well that in percentage terms this country has the highest budgetary deficit in the entire G20, as well as an extremely anaemic growth rate. What particular failure of Government policy has brought about that fiasco?
Mr. Byrne: We make no apology for intervening to protect businesses and families from the worst economic storm for the last 60 years, but the reason that we had the flexibility to take that action is that we went into this recession with the second lowest level of debt in the G7. If the hon. Gentleman takes the IMF figures for 2014, he will see that the figures for this country are 18 per cent. lower than the average for the G7. Once recovery is set in, we have to take steps to halve the deficit over the course of four years and to bring down the structural deficit by some two thirds, and we have set out clear plans to do so-in sharp contrast to the Conservatives.
Ms Sally Keeble (Northampton, North) (Lab): Does my right hon. Friend agree that the worst possible thing to do in dealing with the deficit would be to make disproportionate cuts during the lifetime of the next Parliament? That would lead to savage cuts in public services and a catastrophic loss of jobs in the public sector.
Mr. Byrne: My hon. Friend is right. Suggestions have been put to us for reducing public spending next year-for example, reducing eligibility for child trust funds-but of course that would require legislation in this House, which it is unlikely could be delivered within the next financial year. Others have said that we could reduce eligibility for child tax credits, but of course the proposals that we were told would save £400 million would, in fact, save only £45 million. So the Conservative party has offered no credible plans to reduce public spending next year. However, the key point is that it would be the wrong thing to do because it would put at risk the recovery that we have fought hard for.
7. Mr. Adrian Sanders (Torbay) (LD): What steps his Department is taking to reduce levels of tax avoidance by individuals and businesses. [314434]
The Financial Secretary to the Treasury (Mr. Stephen Timms): We detect avoidance early and we tackle it quickly. The disclosure regime has already helped to prevent more than £12 billion in avoidance opportunities, and in the pre-Budget report, we announced further steps to strengthen it. Building on progress at the G20 London summit, we have signed 21 agreements on tax information exchange with other countries since last January.
Mr. Sanders: If the Government are serious about tackling tax avoidance, why have 25,000 jobs in Her Majesty's Revenue and Customs been cut in the past five years, including recently 20 in my constituency? Surely that hampers the ability of the Minister's Department to investigate, gather evidence and prosecute dodgers.
Mr. Timms: No, we have to manage the affairs of HMRC and other Departments in the most efficient and effective way possible. As the hon. Gentleman said, there has been a substantial reduction in the number of people working in HMRC, partly because of the merger between the old Customs and Revenue Departments, which has enabled a more efficient operation. It is doing a better job, and we are reducing the tax gap, bringing in the tax that the Exchequer needs.
Mr. Stephen Hepburn (Jarrow) (Lab): May I applaud the Government's plans to curb bogus self-employment in the construction industry, which costs this country £1.7 billion a year in lost revenue? May I ask the Minister for an assurance that he will resist any opposition to our plans from construction industry bosses who only want to maintain that culture of hire and fire in the industry?
Mr. Timms: My hon. Friend is absolutely right, and we are certainly sticking to our intentions on that front. In other areas where loopholes emerge, we will act very quickly-on occasions we have acted within days-to close them.
8. Miss Anne McIntosh (Vale of York) (Con): What recent assessment he has made of the financial viability of Government projects operated under the private finance initiative. [314435]
The Economic Secretary to the Treasury (Ian Pearson): Financial viability is assessed as part of the consideration of a project's outlined business case and follows Treasury Green Book rules.
Miss McIntosh: The Economic Secretary will be aware that the country is dependent on a number of waste facilities under private finance initiative projects set when the economy was in a better state. How confident is he that those PFI initiatives will be bid for and met, and that, as a result, the Government will be able to meet their landfill targets?
Ian Pearson: On waste projects, and many other projects supported through the PFI, the Government have a record of which we can be proud. The hon. Lady will be aware of the Manchester waste project of the last calendar year and of the support for it from the Treasury industry finance unit. A number of other waste projects are currently in the PFI pipeline and extend to £19 billion of potential projects. We want to ensure that those projects are delivered, that they deliver good value for money for the taxpayer, and that they help local authorities to meet their landfill targets and our overall carbon targets.
9. Mr. Brian Jenkins (Tamworth) (Lab): What fiscal measures he plans to introduce to support families in the next 12 months. [314436]
The Financial Secretary to the Treasury (Mr. Stephen Timms): The child element of the child tax credit will rise by £65 in April; working tax credit and child benefit will rise by 1.5 per cent; tax thresholds will be frozen, providing a real-terms gain for taxpayers; and, from September, free primary school meals will start to be provided to children from lower income working families.
Mr. Jenkins: I thank my right hon. Friend for that answer. May I pass on to the Government the thanks of many of my constituents for the working families tax credit-as it says on the tin, "working families". He knows that one of the major problems that a family can face is unemployment. What more can he do to reduce the fear and possibility of families facing that hardship?
Mr. Timms: My hon. Friend is absolutely right. Tax credits have played a crucial role, not least in protecting families from unemployment during the downturn, because access to the tax credit system has made reduced hours, instead of job losses, more feasible for people. For example, from April to October last year, 400,000 families whose incomes have fallen have had extra help, averaging £37 per week. Alongside that, of course, we have provided substantial additional resources to Jobcentre Plus, which is why, contrary to many expectations, the number of people in work has remained much more buoyant.
Mr. Graham Stuart (Beverley and Holderness) (Con): Can the Minister confirm whether Energywatch is right to say that the number of families in fuel poverty, at 5.9 million, is greater than at any time in the past 10 years? Could he also tell the House whether the Government plan to meet the child poverty target that they set for 2010?
Mr. Timms: It is of course the case that we have provided substantial support to families over the past couple of years during the downturn. That is why, for example, there are so many fewer home repossessions than were expected, while unemployment is less and the crime rate has gone down rather than up. There is still more to be done on fuel poverty. On child poverty, independent estimates are that we will be about two thirds of the way towards the 2010 target, despite the obvious challenges that we have faced during the downturn, and, as the hon. Gentleman knows, we have legislated for a 2020 target as well.
Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): Many parents are unaware of the support available to them to help them pay the costs of child care if they want to go back into work or remain in work. Will my right hon. Friend liaise with colleagues to ensure that parents understand that there is a child care tax credit, that there will be more free child care places later this year and that there will be pilots for low-cost loans to help parents pay up-front child care costs, so that they can remain in work and their children can be lifted out of poverty?
Mr. Timms: My hon. Friend is absolutely right. Access to good quality affordable child care is crucial for enabling parents to return to work, and we will indeed make further progress as she said.
10. Tom Brake (Carshalton and Wallington) (LD): When he will give final approval for expenditure on the Better Healthcare Closer to Home project. [314437]
The Chief Secretary to the Treasury (Mr. Liam Byrne): Moving health care closer to home is a policy objective of this Government. I think that the hon. Gentleman has in mind a scheme that has been submitted by his local NHS to the Department of Health. That scheme is currently under consideration by that Department and when it comes to me, I can assure him that I will review it thoroughly, but also promptly.
Tom Brake: I would like to thank the Health Minister, the right hon. and learned Member for North Warwickshire (Mr. O'Brien), for his support for the project. Would the Chief Secretary be willing to meet concerned local Members of Parliament over the next couple of weeks, so that we can ensure that the pressure is maintained on the different partners involved in the project and ensure that Better Healthcare Closer to Home is delivered for the residents of Sutton and Merton? The next four weeks are critical.
Mr. Byrne: I am always happy to meet groups of right hon. and hon. Members. In particular, I would like to put on record my thanks to my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for her tireless campaigning on behalf of the project. We are proud of the number of hospitals that the Government have built. We said that we would build 100 new hospitals by 2010; in fact, the Department of Health is on course to build 126 by the end of this year. The scheme to which the hon. Gentleman referred is yet to come to me for approval. The House would expect me to look at the business case thoroughly when it arrives, but as I said to him a moment ago, I also understand the need for speed.
Siobhain McDonagh (Mitcham and Morden) (Lab): May I thank my right hon. Friend for that answer? Can he make a commitment to ensuring that the health services received by my constituents will continue to be a top priority for this Government?
Mr. Byrne:
My hon. Friend can rest assured on that point. I met the Secretary of State for Health last week to begin our preparations together for considering that
particular project. I hope that she will be able to join me and any other hon. Members who would like to get together to discuss that important new development.
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