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Budget Deficit
4. Stephen Hammond (Wimbledon) (Con): What recent estimate he has made of the current and future level of the Budget deficit; and if he will make a statement. [322188]
The Chief Secretary to the Treasury (Mr. Liam Byrne): With your permission, Mr. Speaker, I will answer Questions 4 and 23 together. The Chancellor will provide an update on the Government's-
Mr. Speaker: Order. Far be it from me to rain on the Chief Secretary's parade, but I have received no such request, and I regard both the request and its timing as deeply irregular. I think we will treat the questions separately.
Mr. Byrne: I am very grateful for your judgment, Mr. Speaker; I shall answer Question 4 directly.
The Chancellor will provide an update on the Government's fiscal position, including forecasts for public finance, at the Budget. The Fiscal Responsibility Act 2010 puts a legal obligation on the Government to more than halve the deficit over four years and have debt falling by 2015-16.
Stephen Hammond: The Government's fiscal plans have been criticised by the Governor of the Bank of England and the European Commission in the past week. A few moments ago, in response to my hon. Friend the Member for Sevenoaks (Mr. Fallon), the Chief Secretary said that this was the wrong year to make cuts. Last week, the Chief Secretary told us that there was no need for tax rises, but this week he has changed his mind. Following the Chancellor's reprimand of him, is he now going to tell us that this is the right year and that this Government will be increasing taxes this year?
Mr. Byrne: We were clear in the pre-Budget report about our belief that £19 billion-worth of tax increases need to be secured over the next few years. We have not caveated our language with the kind of dissembling that we have seen in some quarters about whether proposals on national insurance contributions will be reversed or implemented. Alongside those proposals, we have said that £38 billion-worth of cuts and efficiency savings also need to be secured. We have been clear about our plans to halve the deficit-I hope that the Conservative party will match that clarity.
Mr. Parmjit Dhanda (Gloucester) (Lab): At a time when we need to make savings, is my right hon. Friend aware that Gloucestershire has seven local authorities? There are too many councillors and too many local authorities, so in the run-up to the Budget will he consider allowing us to bring in unitary authorities in places such as Gloucestershire? We could save £16 million a year by reducing the number of authorities from seven to two, by cutting the number of councillors and by reducing the amount of duplication. If we took a similar approach across the country, we could save half a billion pounds a year.
Mr. Byrne: I will listen carefully to all sensible proposals to save money.
Dr. Vincent Cable (Twickenham) (LD): Is the Minister not mildly embarrassed that the Government claimed to be leading the international debate on recovery from the financial crisis but have now been chastised by the European Commission for a lack of clarity in their plans for tackling the fiscal deficit? Although the Government have been clear about when to make cuts and how rapidly to do so, they have been massively unclear about what they propose to cut-when are we going to hear that?
Mr. Byrne: I think that the European Commission made the wrong decision by saying to the United Kingdom that we should reduce the deficit to 3 per cent. of GDP by 2014-15. That would entail a cut of well above £20 billion in public spending or commensurate tax increases. In the pre-Budget report we set out deliberately how we would save £20 billion of current spending over the next four years: £4.8 billion of that would come through savings on pay and pensions; there would be £5 billion of cuts to departmental expenditure limits; and £11 billion of it would come through the reorganisation of Whitehall and doing things more efficiently in the future. We set that out clearly in chapter 6 of the pre-Budget report.
Dr. Cable: Does this European report not also relate to a deeper argument within Europe about whether recovery should be led by countries such as Germany widening their deficit-that is the French argument-or by the weaker countries, such as Greece, Ireland, Italy, Spain and probably Britain, taking action on their deficits? Where do the Government stand on that debate?
Mr. Byrne: We are very clear that what is in the interests of the United Kingdom economy-I believe that the hon. Gentleman has made this argument before-is rebalancing our economy in the years to come and having an investment and export-led recovery. No one country can secure that policy acting on its own, which is why international trade reform is part and parcel of our approach to the agenda for the G20 over the year to come. The truth is that if American savers carry on saving at today's rates we will not be able to rely on them to drive growth in the global economy in the way that they have done in the past.
Mr. Dennis Skinner (Bolsover) (Lab): Will my right hon. Friend confirm that there could not be a more bizarre sight than the Tory Front-Bench team joining unelected European Commissioners to call on the British Government to carry out a policy of creating mass unemployment by postponing the attempt to halve the deficit in four years? And the Member for the Liberal party ought to know better than to join these unelected people who want to throw workers on the scrap heap.
Mr. Byrne: My hon. Friend is absolutely right. Over the past year, 22 million people have benefited from tax cuts because of measures we have introduced. Up to 500,000 jobs have been protected, more than 160,000 businesses have been helped with their cash flow and 120,000 jobs have been provided through the future jobs fund. That has all been possible because of the measures that we took over the course of the past year. It would have been impossible to sustain those steps had we followed the advice of the Opposition.
Mr. David Gauke (South-West Hertfordshire) (Con): Given that the Chief Secretary's pronouncements on tax policy last Thursday were overruled by the Chancellor on Sunday, will the Chief Secretary tell the House whether he speaks on these matters with the authority of the Chancellor, or is the relationship between the Chief Secretary and the Chancellor as dysfunctional as the relationship between the Chancellor and the Prime Minister?
Mr. Byrne: What a non-question. What I did last week was set out very clearly proposals for how, over the next four years, we will increase taxes by about £19 billion. They are difficult decisions that no Chancellor wants to implement, but none the less they are decisions that we have faced up to. Alongside that, we have said that we will reduce spending on day-to-day public services, but we will not take precipitate action as proposed by the Opposition. We will lock in the recovery, not put it at risk, as proposed by the Opposition.
Kelvin Hopkins (Luton, North) (Lab):
If John Maynard Keynes were alive today, he would agree absolutely with my hon. Friend the Member for Bolsover (Mr. Skinner) and would have contempt for the views of the Opposition.
May I suggest to my right hon. Friend that cutting now would be about as intelligent as burning witches in the middle ages?
Mr. Byrne: Not just my hon. Friends agree with our approach. My hon. Friend and others may convey it in different language, but that approach is supported not only by the International Monetary Fund but by the Institute for Fiscal Studies, UBS, the CBI, two Nobel economists, the hon. Member for Twickenham (Dr. Cable) -on occasion-and the independent fiscal forecaster for the Conservative party, Sir Alan Budd.
Crown Estate Commissioners
5. Mr. Alistair Carmichael (Orkney and Shetland) (LD): What recent assessment he has made of the performance of the Crown Estate commissioners; and if he will make a statement. [322189]
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): The Crown Estate has delivered good financial returns over the past 10 years, with capital up 66 per cent. and revenue paid to the Exchequer up 70 per cent., reaching £226 million in the last full financial year. Over the past 10 years, the value of the portfolio has increased by £2.3 billion and the Crown Estate has paid a total of £1.8 billion to the Exchequer.
Mr. Carmichael: The Minister is-I hope-aware of the announcement made this morning by the Crown Estate on licensing sea bed areas around Orkney and the north of Scotland for the development of marine renewables. May I tell her, however, that many in the renewables industry, although they welcome the announcement, have serious concerns about the process that the Crown Estate has used in getting to this point? Will she use the powers that are given to her in the Crown Estate Act 1961 to have a look at what has been done to ensure that the Crown Estate becomes a facilitator rather than a hindrance in the development of green renewables?
Sarah McCarthy-Fry: I have to disagree with the hon. Gentleman; I do not think that the Crown Estate is a hindrance. I have had it from the Crown Estate that it wishes to be involved in that process and recognises the importance of the sea bed around Scotland. I am having a meeting with the Crown Estate commissioners in the next couple of weeks and I intend to take various issues to that meeting, including the marine issues to do with renewable energy in Scotland and other matters that have been raised by hon. Members.
Andrew Mackinlay (Thurrock) (Lab): This question reminds me of how, soon after I was elected, I had to do battle with the Crown Estate commissioners on the foreshore of the Thames for putting in jeopardy the 1,000-year-old ferry route between Tilbury and Gravesend. It is rather sad that, as I come to the end of my life in the House of Commons, that ferry is again in jeopardy. I do not know to what extent the Crown Estate commissioners are involved, but I ask my hon. Friend to look into that in her discussions. The real problem is that work, employment and school opportunities for my folk are being put in jeopardy by the Conservative borough council, which wants to cut the subsidy. That was not mentioned to the hon. Member for-
Mr. Speaker: Order. We have got the thrust of the question, but councils are not the responsibility of the Minister.
Sarah McCarthy-Fry: I certainly agree with my hon. Friend that there are frustrating Conservative councils. If the Crown Estate is involved in that decision, I will be more than happy to raise it at my meeting.
Value of Sterling
6. Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): What assessment he has made of the effects on the economy of recent changes in the value of sterling. [322190]
The Economic Secretary to the Treasury (Ian Pearson): As stated in the previous pre-Budget report, the depreciation of sterling is expected to help contribute to recovery in the UK economy. It should give a competitive edge to UK exporters, and encourage UK consumers to switch to domestically produced goods and services.
Mr. Crabb: I thank the Minister for that reply. However, given the faith that Ministers have placed in a weak sterling supporting export growth, does the drop in the previous quarter's export figures not demonstrate again both the complacency of Ministers about the recovery, and the extent of the damage that has been done to the UK's manufacturing and export base under this Government?
Ian Pearson: We are certainly not complacent about the recovery. That is why we have taken the fiscal judgments that we have taken, and why we have said explicitly that we need to make sure that we lock in the recovery. We have taken actions to help exporters through UK Trade and Investment, which helps some 20,000 exporters every year. I happen to believe that there is more to be done: perhaps it is because I come from one of the UK's manufacturing heartlands that I believe that we will not have a successful economic future unless we export goods and services. So, yes, I think that there is more to be done, but this Government have a good record in supporting UK exporters.
Mr. Andrew Love (Edmonton) (Lab/Co-op): Is not the implication of the fact that a more competitive exchange rate has not produced greater exports that we may need to do more to reflate the world economy?
Ian Pearson: Pretty much any economist will say that there is a time lag between depreciation occurring in an economy and its visible effects in both exports and import substitution. I am confident that the normal laws of economics still apply to the UK and the global economy. Because of the financial crisis that has hit the world economy, I have concerns about the effectiveness of banks as a transmission mechanism for supporting growth in our exporters and businesses. However, I have every reason to believe that the exchange rate as it is will help UK firms.
Mr. Speaker: Order. We really must have sharper questions and answers. Progress today is lamentably slow and it needs to get better.
Mr. Greg Hands (Hammersmith and Fulham) (Con): Every time that this discredited Government make any kind of recovery, sterling falls sharply. That is due to their lack of credibility when it comes to the deficit. Does the Minister think that it helps the Government's credibility with the markets and sterling for the Chief Secretary to make promises on tax that he has to retract five days later?
Ian Pearson: The hon. Gentleman must have been reading one of the reports in The Times today, which said that sterling was on the slide as a result of recent announcements. That might have been true between 6 am and 11.40, but then it changed round, and apart from a blip at about 7.40 to 8 o'clock this morning, the pound has gone up again. It has been within a trading range for a considerable period of time.
Capital Allowances
7. Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op): What recent representations he has received from businesses on the level of capital allowances. [322191]
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): We receive representations from a number of public and private sector organisations as part of our policy development and delivery. More than 500,000 businesses that invest are able to claim tax relief on their qualifying investment expenditure under the capital allowances regime. In 2010-11, it is estimated that £62 billion of capital expenditure investment will be made and supported by these allowances.
Mr. Purchase: Does my hon. Friend recall that the polices of the Conservative Government of the 1980s and 1990s meant that it was far more tax-efficient to distribute what should have been retained profits for investment than to retool and re-kit our industry? That was especially true in the west midlands, where we lost a great deal in terms of modernisation. Will she tell us this afternoon that the policy of this Labour Government, which encourages investment, will continue?
Sarah McCarthy-Fry: I assure my hon. Friend that we believe that investment is crucial for the UK economy's long-term success. That is why we acted to support business investment during the recession by temporarily doubling the main rate of capital allowance. We support capital allowances-unlike the Opposition, who wish to cut allowances for investment.
Listed Places of Worship (Grants)
8. Tony Baldry (Banbury) (Con): What plans he has for the future of the listed places of worship grants scheme; and if he will make a statement. [322192]
The Financial Secretary to the Treasury (Mr. Stephen Timms): The Government's plans for the listed places of worship scheme beyond 31 March next year will be announced in the spending review later in the year.
Tony Baldry:
I hope that it will be good news. The Minister will know that the scheme involves money given to help defray the cost of value added tax on
repairing listed buildings. Many communities up and down the country are trying to keep their churches in good repair, and either the scheme has to be extended or the Government must restore heritage as part of national lottery funding. Does he agree that we cannot expect this important element of our built heritage to be done on thin air?
Mr. Timms: The hon. Gentleman raises an important point. This scheme has now generated some £100 million for 10,000 buildings since it was introduced in 2001. We have recognised that listed churches are a special case. Our long-term aim is that a lower rate of VAT should be agreed at European level for instances of that kind, but in the meantime the joint English Heritage/Heritage Lottery Fund scheme is providing £25 million a year. We will look at that particular scheme again in the spending review.
Tax Credits
9. Jessica Morden (Newport, East) (Lab): What recent assessment he has made of the effect on the economy of the operation of tax credits. [322193]
11. Tony Lloyd (Manchester, Central) (Lab): What recent assessment he has made of the effect on the economy of the operation of tax credits. [322195]
The Financial Secretary to the Treasury (Mr. Stephen Timms): Tax credits have supported the economy in the downturn, responding quickly when household income falls. Last October, 400,000 households whose income had fallen since the start of the year were receiving, on average, £37 a week more in tax credits.
Jessica Morden: Tax credits have helped more than 9,000 families in my constituency by supporting them through difficult times and helping to reduce child poverty. Will the Minister reaffirm his commitment to that policy, in contrast to the two main Opposition parties, which are looking to cut tax credits for those on very modest incomes?
Mr. Timms: My hon. Friend is absolutely right. I can reaffirm our commitment to the policy. Under the last Government, child poverty more than doubled, to the highest rate in Europe. We have been able to reverse that rise, and indeed reduce the number of children below the poverty line by 500,000 on the most recent data. I can confirm to my hon. Friend that we will maintain that policy.
Tony Lloyd: My right hon. Friend makes an important point about the impact of tax credits on family poverty. Can he give any guarantees that if there were to be a change in political fortunes, those tax credits would still go into the pockets of families in need?
Mr. Timms: Yes. Our view is that the tax credit system has played a very important role in supporting the economy, particularly in the past year, when a lot of people have seen their income fall-for example, because their hours have been reduced-and it has been possible for their tax credits to increase very quickly in response. I noticed that in my hon. Friend's constituency more than 500 families have benefited, by an average of just over £41.
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