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Mr. Peter Bone (Wellingborough) (Con): I wonder whether the Minister can tell the House how many people have been in his constituency surgery in tears because of the way in which the tax credit system operates.
Mr. Timms: I do not think that I have had people in tears over that in my constituency surgery. The hon. Gentleman might be pleased to note that in April to December 2009 the number of complaints about the operation of the tax credit system was 40 per cent. down on the year before, so we are making good progress.
Youth Employment
10. Andrew Stunell (Hazel Grove) (LD): If he will bring forward proposals for fiscal measures to encourage businesses to employ young people. [322194]
The Chief Secretary to the Treasury (Mr. Liam Byrne): The Government have introduced a significant package of support to help young people into work quickly. This includes the £1.3 billion young person's guarantee of a job, and up to £1,000 for businesses that recruit unemployed young people.
Andrew Stunell: In Stockport, more than 4,000 young people are not in education, employment or training and many employers are ready to help them. Is it not time for the Chancellor to increase his support for employers, so that they can give the young people in my constituency the break and the start that they need?
Mr. Byrne: I will take that as another Budget submission, but just to be clear with the hon. Gentleman, the young person's guarantee is already providing jobs and work experience and training for those aged 16 to 24 who have been out of work for six months. From April this year, if a young person has been out of work for 10 months, they need actually to take that job or that training opportunity, or the community service on offer. We have already provided access to 120,000 jobs for young people through the future jobs fund, paid at the national minimum wage, together with 120,000 pre-employment training places.
Mr. David Drew (Stroud) (Lab/Co-op): Will my right hon. Friend ensure that special help is given to those young people recovering from either mental health problems or addiction difficulties, given that there seems to be a disproportionately high number of such people among the young unemployed?
Mr. Byrne: We can, and partly because of the extra resources that have been put in place in jobcentres, many thousands more people have been added to the strength of that particular front line. That obviously increases the personalisation of the service that jobcentres can offer, and it is part of the reason that 3.5 million people have been helped off jobseeker's allowance and into jobs over the past year.
Mr. Mark Hoban (Fareham) (Con): Last week, before he was forced to make his humiliating climbdown on tax increases, the Chief Secretary was boasting about the difficult decision to increase national insurance. Will he tell the House what the impact of that difficult decision would be on unemployment?
Mr. Byrne: Experience suggests that general national insurance cuts and wage support have very limited impact on employment. Of course, taking those national insurance contributions out of the forward programme for tax would leave a £7 billion hole in the tax base. The Conservative party has yet to come clean with the public about how it intends to fill that gap.
Credit Rating
13. Alistair Burt (North-East Bedfordshire) (Con): What recent representations he has received from credit rating agencies on the UK's triple A rating. [322197]
The Economic Secretary to the Treasury (Ian Pearson): As the House would expect, Treasury Ministers and officials have meetings with a wide variety of organisations.
Alistair Burt: I thank the Minister for his conclusive answer. With a Budget deficit higher than that of the Greeks, is it not a matter of some embarrassment to the Government that after 13 years of their being responsible for the economy, serious figures-from the CBI, to the Bank of England, to credit rating agencies-are raising questions about this country's credit rating in the manner of some disreputable pyramid scheme salesman who has finally been caught out?
Ian Pearson: I do not think that the hon. Gentleman's words are representative of how a vast majority of informed commentators look at these issues. They certainly are not representative of the credit rating agencies, all of which recognise the UK's strong funding flexibility. They continue to judge the UK as having the highest possible sovereign credit rating. I point out to him that average debt maturity in the UK is 13.5 years, which is twice that in France, Germany and Italy, and is more than three times that in the United States.
Mr. Gordon Prentice (Pendle) (Lab): Is it not the case that the credit rating agencies take account of the real economy, that Britain is the world's sixth largest exporter of manufactured goods and the world's second largest exporter of services, and that there is no possibility of the credit rating agencies downgrading our rating?
Ian Pearson: My hon. Friend is absolutely right to point to the strength of the UK as a manufacturing nation and our strength in exporting services. Rather than speculate about credit ratings when it is very clear from all that the credit rating agencies have said that there is currently no risk to the UK's credit rating, we should focus on a strategy for growth and jobs for the future. We will hear more about that next week.
Government Holdings (RBS)
14. Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): What recent discussions he has had with UK Financial Investments Ltd on its management of the Government holding in the Royal Bank of Scotland. [322198]
The Economic Secretary to the Treasury (Ian Pearson): The Treasury holds frequent discussions with UK Financial Investments on a range of topics related to the Government's holdings in RBS, in line with the investment framework and investment mandate.
Mr. Clarke: Does my hon. Friend accept that it is very difficult for me to convey the absolute anger of a number of my constituents, especially small businesses, many of which have been forced to the wall because of the lending policies of those institutions? Does he accept that that is all the more repugnant given that RBS found £1 million to pay 100 executive bonuses last year? Clearly, something has to be done.
Ian Pearson: My right hon. Friend will be aware of my comments on bonuses and what RBS has said on the matter. It is certainly the case that some businesses have, sadly, gone to the wall as a result of the global recession. The Government have always been consistent in pressing to make sure that lending continues in the UK economy. He might be aware that RBS recently announced a £1 billion manufacturing fund for providing flexible long-term loans to businesses. I am sure that that will be welcomed by businesses in Scotland and throughout the UK given RBS's role right through the UK economy.
Mr. William Cash (Stone) (Con): Does the Minister accept that the question of the RBS debt is central to the question of public sector debt generally? Does he disagree with the Office for National Statistics that the total amount of debt is between £2.65 trillion and £3.15 trillion, or between 185 and 215 per cent. of gross domestic product when financial sector interventions are included?
Ian Pearson: I do not have the figures from the ONS to hand, but I have no reason to doubt the hon. Gentleman. It is established practice when reporting on Government accounts to exclude financial interventions in RBS and Lloyds Banking Group. In the same way, the German Federal Government tend to exclude KfW and their investments in banks. I do not think that anything we are doing is particularly unusual and, as we have discussed before, there are different methods of accounting, which are at issue. I do not think, however, that party politics should be part of that. We are clear and transparent about the overall financial situation.
Economic Growth Forecasts
15. Andrew Selous (South-West Bedfordshire) (Con): What recent discussions he has had with the Prime Minister on forecasts for economic growth. [322199]
The Economic Secretary to the Treasury (Ian Pearson): I am on a roll. The Chancellor and the Prime Minister have regular discussions on a range of issues, including the prospects for the UK economy.
Andrew Selous: It would be good if the country was on a roll, too. Exports are absolutely vital for our future economic growth, so why during the Government's stewardship has the UK's share of world trade fallen by 31 per cent., when Germany's has gone up by 5 per cent.?
Ian Pearson: My right hon. Friend the Chief Secretary says that the hon. Gentleman might have noticed the rise of India and China over the past 10 to 15 years, which probably explains why the UK has slipped down to being the sixth largest manufacturing nation in the world. However, we are still the second largest exporter of services, and our manufacturing performance is strong. I believe that it will become stronger over the next 12 months to two years, and a competitive exchange rate will help a great deal.
Topical Questions
T1. [322210] Mr. Mark Lancaster (North-East Milton Keynes) (Con): If he will make a statement on his departmental responsibilities.
The Chief Secretary to the Treasury (Mr. Liam Byrne): The Treasury's responsibilities remain as the Chancellor has set out on previous occasions.
Mr. Lancaster: I appreciate that the Chief Secretary is pretty embarrassed about his U-turn this morning. Last week, he ruled out VAT increases, presumably to curry favour with the Prime Minister and undermine the Chancellor, so can he simply explain to the House when and why he changed his mind?
Mr. Byrne: I have merely set out the statement made by my right hon. Friend the Chancellor at the pre-Budget report about how we plan to halve the deficit over the next four years by raising taxes by £19 billion. We will do so in a fair way, unlike the Opposition, if they ever get into power, by ensuring that half the taxes that we raise fall on the shoulders of the top 5 per cent. of earners. Alongside that, we will cut capital and current spending by £38 billion. In that way, we will halve the deficit over four years, as set out by the Fiscal Responsibility Act 2010. What we will not do is pursue the Opposition's approach, which is to introduce cuts now and put the economy into a double-dip recession. We will not follow the approach set out by the shadow Business Secretary this morning by reducing our deficit to 3 per cent. of GDP in 2014-15, because that would require taking out something like an extra £20 billion to £30 billion of public spending-a strategy that has not been renounced by the Opposition Front Bench this afternoon.
Mr. Speaker: As right hon. and hon. Members know, topical questions and answers are supposed to be shorter- a fine example, I know, will now be provided by Mrs. Madeleine Moon.
T3. [322212] Mrs. Madeleine Moon (Bridgend) (Lab): Low interest rates on savings in the UK can encourage people who receive what appear to be high-interest offers by telephone, e-mail or letter to invest in US share scams-so-called boiler scams. How can we alert the public to those scams so that they avoid those scam savers who are stealing our investors' money?
The Economic Secretary to the Treasury (Ian Pearson):
Boiler room scams are completely unacceptable. It is the responsibility of the Financial Services Authority to take action in this area, and it has increased its surveillance capacity quite substantially. My hon. Friend is right to make the point about the importance of savers. People
need to have confidence in the savings products in which they invest, and it is the responsibility of the regulatory authorities to ensure that that confidence is not misplaced.
T2. [322211] Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): Will Ministers promise to revise the business rate valuation model for rural filling stations, many of which are seeing increases in rates of more than 300 per cent. this year, putting many of them out of business as a result?
Ian Pearson: The Valuation Office Agency is directly responsible for the matter. For the past two and a half years it has been involved in discussions with representatives from the industry and their agents. There must come a time when negotiations stop. There are three aspects of the model. They are not exceptional, but I agree that some of the rating valuations appear to be very high. The VOA continues to work on the matter.
T5. [322214] Tony Lloyd (Manchester, Central) (Lab): If Ministers accepted the advice of the shadow Business Secretary and cut a further £20 billion to £30 billion from the economy, what would be the cost in lost output, employment and services, and who would pay that cost?
Mr. Speaker: Order. I know the Chief Secretary will be well aware, because he is a clever fellow, that the responsibility of the Government does not extend at Question Time to the costing of the policies of other parties, so I know he will not comment on that.
Mr. Byrne: If I were asked to take £25 billion out of public spending, I would merely point out that that would involve halving the education budget or increasing VAT to 23 per cent.
T4. [322213] Mr. Julian Brazier (Canterbury) (Con): Does the Chief Secretary accept the reproach from the European Commission that the plans for deficit cutting in this country are unambitious? Which of his various views on VAT were designed to address it?
Mr. Byrne: I said this morning that we think the European Commission is wrong to say that we should be trying to reduce our deficit to 3 per cent. of GDP by 2014-15, which is the timetable proposed by the Commission. I look forward to members of the shadow Front-Bench team confirming that that is their position, too.
Phil Wilson (Sedgefield) (Lab): What progress is being made with the G20 in making the international banking industry more responsible by introducing such measures as a Tobin tax?
The Financial Secretary to the Treasury (Mr. Stephen Timms): I welcome the campaign for the Robin Hood tax, as it has been described, for the energy that it has generated and the interest in this important area. Any changes in that direction would need to be made on a global basis, not just on a UK basis, and the IMF will look at that option with others to see how the balance of risk and reward between the banks and taxpayers can be changed for the future.
T6. [322215] Alistair Burt (North-East Bedfordshire) (Con): A few moments ago the Economic Secretary recognised that the laws of economics apply to the Government. As one of the final actions here of a decent and likeable Minister, would he dare take that knowledge to his Prime Minister, who some years ago claimed to have abolished boom and bust and therefore have the laws of economics apply to a higher power?
Ian Pearson: I thank the hon. Gentleman for his kind words, which are typically generous of him. I do not think the Prime Minister needs any lectures in economics. He was an outstanding Chancellor of the Exchequer and is a very effective Prime Minister, as I am sure the Opposition will recognise in the course of the upcoming election campaign. I will happily watch it from the sidelines.
Dr. Brian Iddon (Bolton, South-East) (Lab): Why, in the current economic climate, do we allow the salaries of senior managers in the public sector, such as vice-chancellors of universities, chief executives of local authorities and chief executives of housing associations, to rise way above the rate of inflation, while those same managers are encouraged to keep the salaries of the public sector workers whom they manage at a very low level?
Mr. Byrne: We have repaired the salaries of public service workers in this country. Over the past decade, public sector wages have risen by about 25 per cent., but at a time like this we think it is important that senior leaders in the public sector show an example, which is why, in our evidence to the Senior Salaries Review Body, we recommended a pay rise of 0 per cent. That was the rise that we implemented across the board last week.
T7. [322216] Mr. Geoffrey Clifton-Brown (Cotswold) (Con): Do the Government accept that the staggering rise of 35 per cent. in tax and duty on wine and spirits has had any connection with the loss of 25,500 jobs, and 2,000 jobs in that sector? What plans do the Government have to help that important sector of the economy?
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): I do not want to pre-empt any announcements that will be made by my right hon. Friend the Chancellor in the Budget next week. We recognise that alcohol duties play an important part in fiscal consolidation, but we also recognise that the alcohol industry creates many jobs. We will get that balance right.
Hugh Bayley (City of York) (Lab): When the time comes for the Government to sell off their shareholdings in the banks that they rescued last year, what steps will they take to ensure that the taxpayer gets best value for money?
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